As filed with the Securities and Exchange Commission
on October 2, 2000
Registration No. 811-9689
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
AMENDMENT NO. 2 TO THE
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
------------------------
WELLS FARGO CORE TRUST
(Exact Name of Registrant as specified in Charter)
525 Market Street
San Francisco, CA 94163
(Address of Principal Executive Offices, including Zip Code)
--------------------------
Registrant's Telephone Number, including Area Code: (800) 643-9691
C. David Messman
Wells Fargo Bank, N.A.
633 Folsom Street, 7th Floor
San Francisco, CA 94107
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster LLP
2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006
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EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant
to Section 8(b) of the Investment Company Act of 1940, as amended, in order to
add audited financial information for the Income Portfolios of Wells Fargo Core
Trust. Beneficial interests in the Registrant have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), since such interests are
issued solely in private placement transactions which do not involve any "public
offering" within the meaning of Section 4(2) of the 1933 Act. Investments in the
Registrant may only be made by investment companies or certain other entities
which are "accredited investors" within the meaning of Regulation D under the
1933 Act. This Registration Statement does not constitute an offer to sell, or
the solicitation of an offer to buy, any beneficial interests in the Registrant.
<PAGE>
Part A
WELLS FARGO CORE TRUST
PRIVATE PLACEMENT MEMORANDUM
Disciplined Growth Portfolio
Index Portfolio
Equity Income Portfolio
International Equity Portfolio
International Portfolio
Large Company Growth Portfolio
Managed Fixed Income Portfolio
Positive Return Bond Portfolio
Small Cap Index Portfolio
Small Cap Value Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Stable Income Portfolio
Strategic Value Bond Portfolio
October 2, 2000
Responses to Items 1 through 3 have been omitted pursuant to paragraph (B)(2)(b)
of the General Instructions to Form N-1A.
Wells Fargo Core Trust ("Trust") is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Trust is currently comprised of fourteen separate series of
Portfolios (each a "Portfolio" and collectively the "Portfolios"): Disciplined
Growth Portfolio, Index Portfolio, Equity Income Portfolio, International Equity
Portfolio, International Portfolio, Large Company Growth Portfolio, Managed
Fixed Income Portfolio, Positive Return Bond Portfolio, Small Cap Index
Portfolio, Small Cap Value Portfolio, Small Company Growth Portfolio, Small
Company Value Portfolio, Stable Income Portfolio, and Strategic Value Bond
Portfolio. The Trust's Declaration of Trust authorizes the Board of Trustees to
issue an unlimited number of beneficial interest ("Interests") and to establish
and designate such Interests into one or more Portfolios. Wells Fargo Bank, N.A.
("Wells Fargo" or "Advisor") serves as the investment advisor to each of the
Portfolios.
ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND RELATED
RISKS.
The investment objective of each Portfolio is non-fundamental, and may be
changed by a vote of the Board of Trustees.
Disciplined Growth Portfolio: The Portfolio seeks capital appreciation by
investing primarily in common stocks of larger companies.
The Portfolio seeks higher long-term returns by investing primarily in the
common stock of companies that, in the view of the Advisor, possess above
average potential for growth. The Portfolio invests in companies with average
market capitalizations greater than $5 billion.
The Portfolio seeks to identify growth companies that will report a level of
corporate earnings that exceed the level expected by investors. In seeking these
companies, the Advisor uses both quantitative and fundamental analysis. The
Advisor may consider, among other factors, changes of earnings estimates by
investment analysts, the recent trend of company earnings reports, and an
analysis of the fundamental business outlook for the company. The Advisor uses a
variety of valuation measures to determine whether or not the share price
already reflects any positive fundamentals identified by the Advisor. In
addition to approximately equal weighting of portfolio securities, the Advisor
attempts to constrain the variability of the investment returns by employing
risk control screens for price volatility, financial quality, and valuation.
The principal risk factor associated with this Portfolio is market risk. See the
"Related Risks" section below for a discussion of this risk and other risks of
investing in this Portfolio.
Index Portfolio: The Portfolio seeks to replicate the total rate of return of
the Standard & Poor's 500 Composite Stock Index (the "S&P 500 Index").
The Portfolio invests in substantially all of the common stocks listed on the
S&P 500 Index and attempts to achieve at least a 95% correlation between the
performance of the S&P 500 Index and the Portfolio's investment results, before
expenses. This correlation is sought regardless of market conditions.
A precise duplication of the performance of the S&P 500 Index would mean that
the net asset value of Interests, including dividends and capital gains would
increase or decrease in exact proportion to changes in the S&P 500 Index. Such a
100% correlation is not feasible. The Advisor's ability to track the performance
of the S&P 500 Index may be affected by, among other things, transaction costs
and shareholder purchases and redemptions. The Advisor continuously monitors the
performance and composition of the S&P 500 Index and adjusts the Portfolio's
securities as necessary to reflect any changes to the S&P 500 Index.
Under normal market conditions, the Portfolio invests in a diversified portfolio
of common stocks designed to provide a relative sample of the stocks listed on
the S&P 500 Index; in stock index futures and options on stock indexes as a
substitute for comparable position in the underlying securities, and in
interest-rate futures contracts, options or interest rate swaps and index swaps.
The principal risk factors associated with this Portfolio are index risk and
market risk. See the "Related Risks" section below for a discussion of these
risks and other risks of investing in this Portfolio.
Equity Income Portfolio: The Portfolio seeks long-term capital appreciation
and above-average dividend income.
The Portfolio invests primarily in the common stock of large, high-quality
domestic companies that have above-average return potential based on current
market valuations. The Advisor primarily emphasizes investments in securities of
companies with above-average dividend income. The Advisor uses various valuation
measures when selecting securities for the portfolio, including above-average
dividend yields and below industry average price-to-earnings, price-to-book and
price-to-sales ratios. The Advisor considers "large" companies to be those whose
market capitalization is greater than the median of the Russell 1000 Index.
Under normal market conditions, the Portfolio invests at least 65% of total
assets in income-producing equity securities and in issues of companies with
market capitalization greater than the median of the Russell 1000 Index.
The Advisor may invest in preferred stocks, convertible securities, and
securities of foreign companies. The Advisor will normally limit investment in a
single issuer to 10% or less of total assets.
The principal risk factors associated with this Portfolio are market risk and
interest rate risk. See the "Related Risks" section below for a discussion of
these risks and other risks of investing in this Portfolio.
International Equity Portfolio: The Portfolio seeks total return, with an
emphasis on capital appreciation, over the long-term, by investing primarily
in equity securities of non-U.S. companies.
The Portfolio seeks to earn total return by investing at least 80% of its assets
in common stock of companies located or operating in developed and emerging
markets. It is expected that the securities held by the Portfolio will be traded
on a stock exchange or other market in the country in which the issuer is based,
but they also may be traded in other countries, including the United States. The
Portfolio must invest its assets in the securities of at least five different
countries other than the United States. The Portfolio may also invest in
American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs") and
similar instruments.
The Advisor applies a fundamentals-driven, value-oriented analysis to identify
companies with above-average potential for long-term growth. The Advisor
examines financial data including the company's historical performances and its
projected future earnings. The Advisor also considers other key criteria such as
a company's local, regional or global franchise; history of effective management
demonstrated by expanding revenues and earnings growth; and prudent financial
and accounting policies and ability to take advantage of a changing business
environment. In allocating among countries, regions and industry sectors, the
Advisor considers factors such as economic growth prospects, monetary and fiscal
policies, political stability, currency trends, market liquidity and investor
sentiment.
The principal risk factors associated with this Portfolio are currency risk,
emerging market risk, foreign risk, market risk and regulatory risk. See the
"Related Risks" section below for a discussion of these risks and other risks of
investing in this Portfolio.
International Portfolio: The Portfolio seeks long-term capital appreciation by
investing directly or indirectly in high-quality companies based outside the
United States. The Portfolio selects its investments on the basis of their
potential for capital appreciation without regard to current income. The
Portfolio may also invest in the securities of domestic closed-end investment
companies that invest primarily in foreign securities and may invest in debt
obligations of foreign governments or their political subdivisions, agencies, or
instrumentalities, of supranational organizations, and of foreign corporations.
The Portfolio's investments are generally diversified among securities of
issuers in foreign countries including, but not limited to Japan, Germany, the
United Kingdom, France, the Netherlands, Hong Kong, Singapore, and Australia. In
general, the Portfolio will invest only in securities of companies and
governments in countries that the Adviser, in its judgment, considers both
politically and economically stable. The Portfolio has no limit on the amount of
its assets that may be invested in any one type of foreign instrument or in any
foreign country; however, to the extent the Portfolio concentrates its assets in
a foreign country, it will incur greater risks.
Under normal circumstances, the International Portfolio will invest
substantially all of its assets, but not less than 65% of its net assets, in
equity securities of companies domiciled outside the United States. The
Portfolio may purchase preferred stock and convertible debt securities,
including convertible preferred stock. The Portfolio also may enter into foreign
exchange contracts, including forward contracts to purchase or sell foreign
currencies, in anticipation of its currency requirements and to protect against
possible adverse movements in foreign exchange rates and may purchase ADRs, EDRs
or other similar securities of foreign issuers.
The principal risk factors associated with this Portfolio are currency risk,
foreign risk and market risk. See the "Related Risks" section below for a
discussion of these risks and other risks of investing in this Portfolio.
Large Company Growth Portfolio: The Portfolio seeks long-term capital
appreciation by investing primarily in large, high-quality domestic companies
that the Advisor believes have superior growth potential. The Advisor considers
"large" companies to be those whose market capitalization is greater than the
median of the Russell 1000 Index. In selecting securities for the Portfolio, the
Advisor seeks issuers whose stock is attractively valued with fundamental
characteristics that are significantly better than the market average and that
support internal earnings growth capability. The Advisor may invest in the
securities of companies whose growth potential the Advisor believes is generally
unrecognized or misperceived by the market.
The Advisor will not invest more than 10% of the Portfolio's total assets in the
securities of a single issuer. The Advisor may invest up to 20% of the
Portfolio's total assets in the securities of foreign companies and may hedge
against currency risk by using foreign currency forward contracts.
The principal risk factors associated with this Portfolio are currency risk,
foreign risk, leverage risk and market risk. See the "Related Risks" section
below for a discussion of these risks and other risks of investing in this
Portfolio.
Managed Fixed Income Portfolio: The Portfolio seeks consistent fixed-income
returns by investing primarily in investment grade intermediate-term securities.
The Advisor invests in a diversified portfolio of fixed and variable rate U.S.
dollar denominated, fixed-income securities of a broad spectrum of U.S. and
foreign issuers, including securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or its instrumentalities ("U.S.
Government Securities"), and the debt securities of financial institutions,
corporations and others. The Advisor emphasizes the use of intermediate maturity
securities to lessen duration and employs low risk yield enhancement techniques
to enhance return over a complete economic or interest rate cycle. The Advisor
considers intermediate-term securities to be those with maturities of between 2
and 20 years.
The Portfolio will limit its investment in mortgage-backed securities to not
more than 65% of its total assets and its investment in asset-backed securities
to not more than 25% of its net assets. In addition, the Portfolio may not
invest more than 30% of its total assets in securities issued or guaranteed by
any single agency or instrumentality of the U.S. Government, except the U.S.
Treasury.
The Portfolio normally will have an average dollar-weighted portfolio maturity
of between 3 and 12 years and a duration of between 2 and 6 years.
While not a principal strategy, the Advisor also may purchase up to 10% of its
total assets in securities issued or guaranteed by foreign governments the
Advisor deems stable, or their subdivisions, agencies, or instrumentalities;
loan or security participations; securities of supranational organizations; and
municipal securities.
The principal risk factors associated with this Portfolio are credit risk,
leverage risk, foreign risk, market risk, interest rate risk and prepayment
risk. See the "Related Risks" section below for a discussion of these risks and
other risks of investing in this Portfolio.
Positive Return Bond Portfolio: The Portfolio seeks to produce a positive return
each calendar year regardless of general bond market performance. The Portfolio
invests in U.S. Government securities and corporate fixed-income investments.
The Portfolio's assets are divided into two components, short bonds with
maturities (or average life) of 2 years or less and long bonds with maturities
of 25 years or more. Shifts between short bonds and long bonds are made based on
movement in the prices of bonds rather than on the Advisor's forecast of
interest rates. During periods of falling prices (generally, increasing interest
rate environments) long bonds are sold to protect capital and limit losses.
Conversely, when bond prices rise, long bonds are purchased. The average
dollar-weighted maturity of the Portfolio will vary between 1 and 30 years.
Under normal circumstances, the Advisor invests at least 50% of the net assets
in U.S. Government securities, including U.S. Treasury securities. The Advisor
only purchases securities that are rated, at the time of purchase, within 1 of
the 2 highest long-term rating categories assigned by a nationally recognized
statistical rating organization ("NRSRO") or that are unrated and determined by
the Advisor to be of comparable quality. The Advisor may invest up to 25% of its
assets in securities rated in the second highest rating category. The Advisor
does not invest more than 25% of the Portfolio's total assets in zero-coupon
securities, securities with variable or floating rates of interest, or
asset-backed securities.
The principal risk factors associated with this Portfolio are credit risk,
market risk, interest rate risk, prepayment risk and leverage risk. See the
"Related Risks" section below for a discussion of these risks and other risks of
investing in this Portfolio.
Small Cap Index Portfolio: The Portfolio seeks to replicate the return of the
Standard & Poor's Small Cap 600 Composite Stock Price Index ("S&P 600 Small Cap
Index"). The Portfolio seeks to replicate this return with minimum tracking
error and to minimize transaction costs. Under normal circumstances, the
Portfolio will hold stocks representing 100% of the capitalization-weighted
market values of the S&P 600 Small Cap Index. The Advisor generally executes
portfolio transactions only to replicate the composition of the S&P 600 Small
Cap Index, to invest cash received from portfolio security dividends or
investments in the Portfolio, and to raise cash to fund redemptions. The
Portfolio may hold cash or cash equivalents to facilitate payment of the
Portfolio's expenses or redemptions and may invest in index futures contracts.
For these and other reasons, the Portfolio's performance can be expected to
approximate but not equal that of the S&P 600 Small Cap Index.
The principal risk factors associated with this Portfolio are leverage risk,
market risk, index risk and small company risk. See the "Related Risks" section
below for a discussion of these risks and other risks of investing in this
Portfolio.
Small Cap Value Portfolio: The Portfolio seeks capital appreciation by investing
in common stocks of smaller companies. The Advisor will normally invest
substantially all of the Portfolio's assets in securities of companies with
market capitalizations that reflect the market capitalization of companies
included in the Russell 2000 Index.
The Advisor seeks higher growth rates and greater long-term returns by investing
primarily in the common stock of smaller companies that the Advisor believes to
be undervalued and likely to report a level of corporate earnings exceeding the
level expected by investors. The Advisor values companies based upon both the
price-to-earnings ratio of the company and a comparison of the public market
value of the company to a proprietary model that values the company in the
private market. In seeking companies that will report a level of earnings
exceeding that expected by investors, the Advisor uses both quantitative and
fundamental analysis. Among other factors, the Advisor considers changes of
earnings estimates by investment analysts, the recent trend of company earnings
reports, and the fundamental business outlook for the company.
The principal risk factors associated with this Portfolio are market risk and
small company risk. See the "Related Risks" section below for a discussion of
these risks and other risks of investing in this Portfolio.
Small Company Growth Portfolio: The Portfolio seeks to provide long-term
capital appreciation by investing in smaller domestic companies.
The Portfolio invests primarily in the common stock of small and medium-sized
domestic companies that are either growing rapidly or completing a period of
significant change. Small companies are those companies whose market
capitalization is less than the largest stock in the Russell 2000 Index or
approximately $1.4 billion.
In selecting securities for the Portfolio, the Advisor seeks to identify
companies that are rapidly growing (usually with relatively short operating
histories) or that are emerging from a period of investor neglect by undergoing
a dramatic change. These changes may involve a sharp increase in earnings, the
hiring of new management or measures taken to close the gap between share price
and takeover/asset value.
The Portfolio may invest up to 10% of its total assets in securities of foreign
companies. The Portfolio will not invest more than 10% of its total assets in
the securities of a single issuer.
The principal risk factors associated with this Portfolio are currency risk,
small company risk, foreign risk and market risk. See the "Related Risks"
section below for a discussion of these risks and other risks of investing in
this Portfolio.
Small Company Value Portfolio: The Portfolio seeks to provide long-term capital
appreciation. The Portfolio primarily invests in smaller companies whose market
capitalization is less than the largest stock in the Russell 2000 Index. The
Advisor focuses on securities that are conservatively valued in the marketplace
relative to the stock of comparable companies, determined by price/earnings
ratios, cash flows, or other measures. Value investing provides investors with a
less aggressive way to take advantage of growth opportunities of small
companies. Value investing may reduce downside risk and offer potential for
capital appreciation as a stock gains favor among other investors and its stock
price rises.
The principal risk factors associated with this Portfolio are leverage risk,
market risk and small company risk. See the "Related Risks" section below for a
discussion of these risks and other risks of investing in this Portfolio.
Stable Income Portfolio: The Portfolio seeks to maintain stability of
principal while providing low volatility total return.
The Portfolio invests primarily in short-term investment-grade securities. The
Advisor invests in a diversified portfolio of fixed and variable rate U.S.
dollar-denominated fixed-income securities of a broad spectrum of U.S. and
foreign issuers, including U.S. Government securities and the debt securities of
financial institutions, corporations, and others. Under normal market
conditions, the Portfolio will limit its investment: (i) in mortgage-backed
securities to not more than 65% of its total assets; (ii) other types of
asset-backed securities to not more than 25% of its total assets; (iii)
mortgage-backed securities that are not U.S. Government securities to not more
than 25% of its total assets; and (iv) U.S. Government securities to not more
than 50% of its total assets.
The Portfolio may not invest more than 30% of its total assets in the securities
issued or guaranteed by any single agency or instrumentality of the U.S.
Government, except the U.S. Treasury, and may not invest more than 10% of its
total assets in the securities of any other issuer.
The Portfolio only purchases investment grade securities. The Portfolio invests
in debt obligations with maturities (or average life in the case of
mortgage-backed and similar securities) ranging from overnight to 12 years and
seeks to maintain an average dollar weighted portfolio maturity of between 2 and
5 years.
The Portfolio may use options, swap agreements, interest rate caps, floors,
collars, and futures contracts to manage risk. The Portfolio also may use
options to enhance return.
The principal risk factors associated with this Portfolio are credit risk,
leverage risk, foreign risk, market risk, interest rate risk and prepayment
risk. See the "Related Risks" section below for a discussion of these risks and
other risks of investing in this Portfolio.
Strategic Value Bond Portfolio: The Portfolio seeks total return by investing
primarily in income producing securities. The Portfolio invests in a broad range
of fixed-income instruments in order to create a strategically diversified
portfolio of fixed-income investments. These investments include corporate
bonds, mortgage- and asset-backed securities, U.S. Government securities,
preferred stock, convertible bonds and foreign bonds.
The Advisor focuses on relative value as opposed to predicting the direction of
interest rates. In general, the Portfolio seeks higher current income
instruments, such as corporate bonds and mortgage- and asset backed securities,
in order to enhance returns. The Advisor believes that this exposure enhances
performance in varying economic and interest rate cycles and avoids excessive
risk concentrations. The Advisor's investment process involves rigorous
evaluation of each security, including identifying and valuing cash flows,
embedded options, credit quality, structure, liquidity, marketability, current
versus historical trading relationships, supply and demand for the instrument
and expected returns in varying economic/interest rate environments. The Advisor
uses this process to seek to identify securities which represent the best
relative economic value. The Advisor then evaluates the results of the
investment process against the Portfolio's objective and purchases those
securities that are consistent with the Portfolio's investment objective.
The Portfolio particularly seeks strategic diversification. The Portfolio will
not invest more than 75% of its total assets in corporate bonds, 65% of its
total assets in mortgage-backed securities, and 50% of its total assets in
asset-backed securities. The Portfolio may invest in U.S. Government Securities
without restriction.
The Portfolio will invest 65% of its total assets in fixed-income securities
rated, at the time of purchase, within the three highest rating categories by at
least one NRSRO, or which are unrated and determined by the Advisor to be of
comparable quality. The Portfolio may invest up to 20% of its total assets in
non-investment grade securities. The average dollar-weighted maturity of the
Portfolio will vary between 5 and 15 years. The Portfolio's duration normally
will vary between 3 and 8 years. Duration is a measure of a debt security's
average life that reflects the present value of the security's cash flow and is
an indication of the security's sensitivity to a change in interest rates. The
Portfolio may use options, swap agreements, interest rate caps, floors and
collars, and futures contracts to manage risk. The Portfolio may also use
options to enhance returns.
The principal risk factors associated with this Portfolio are credit risk,
market risk, interest rate risk, prepayment risk and leverage risk. See the
"Related Risks" section below for a discussion of these risks and other risks of
investing in this Portfolio.
RELATED RISKS
While investing in equity securities and fixed-income securities can bring added
benefits, it may also involve additional risks. Investors could lose money on
their investment in the Portfolios, or the Portfolios may not perform as well as
other investments. The Portfolios have the following general risks:
o Unlike bank deposits, such as CDs or savings accounts, mutual funds are not
insured by the FDIC.
o There is no guarantee that the Portfolios will meet their investment
objectives.
o We do not guarantee the performance of a Portfolio, nor can we assure you
that the market value of your investment will not decline. We will not
"make good" any investment loss you may suffer, nor can anyone we contract
with to provide certain services, such as selling agents or investment
advisors, offer or promise to make good any such losses.
o Share prices-and therefore the value of your investment-will increase and
decrease with changes in the value of underlying securities and other
investments.
o Investing in any mutual fund, including those deemed conservative, involves
risk, including the possible loss of any money you invest.
o An investment in a single Portfolio, by itself, does not constitute a
complete investment plan.
o The Portfolios that invest in small companies, foreign companies (including
investments made through ADRs and similar instruments), and in emerging
markets are subject to additional risks, including less liquidity and
greater price volatility. A Portfolio's investment in foreign and emerging
markets may also be subject to special risks associated with international
trade, including currency, political, regulatory and diplomatic risk.
o The Portfolios may invest a portion of their assets in U.S. Government
obligations. It is important to recognize that the U.S. Government does not
guarantee the market value or current yield of those obligations. Not all
U.S. Government obligations are backed by the full faith and credit of the
U.S. Treasury, and the U.S. Government's guarantee does not extend to the
Portfolios themselves.
o The Portfolios may also use certain derivative instruments, such as options
or futures contracts. The term "derivatives" covers a wide number of
investments, but in general it refers to any financial instrument whose
value is derived, at least in part, from the price of another security or a
specified index, asset or rate. Some derivatives may be more sensitive to
interest rate changes or market moves, and some may be susceptible to
changes in yields or values due to their structure or contract terms.
o The Portfolios may temporarily hold assets in cash or in money market
instruments, including U.S. Government obligations shares of other mutual
funds and repurchase agreements, or make other short-term investments,
either to maintain liquidity or for short-term defensive purposes. A
Portfolio may not achieve its investment objective while it is investing
defensively. This practice is expected to have limited, if any, effect on
the Portfolios' pursuit of their objectives over the long term.
o The Portfolios may invest a portion of their assets in U.S. Government
obligations, such as securities issued or guaranteed by the Government
National Mortgage Association ("GNMAs"), the Federal National Mortgage
Association ("FNMAs") and the Federal Home Loan Mortgage Corporation
("FHLMCs"). Each mortgage-backed securities representing partial ownership
of a pool of residential mortgage loans. A "pool" or group of such
mortgages is assembled and, after being approved by the issuing or
guaranteeing entity, which can alter the maturity of the securities and
also reduce the rate of return on the portfolio, is offered to investors.
Collateralized mortgage obligations ("CMOs") typically represent
principal-only and interest-only portions of such securities and are
subject to increased interest-rate and credit risk.
o The market value of lower-rated debt securities and unrated securities of
comparable quality tends to reflect individual developments affecting the
issuer to a greater extent than the market value of higher-rated
securities, which react primarily to fluctuations in the general level of
interest rates. Lower-rated securities also tend to be more sensitive to
economic conditions than higher-rated securities. These lower-rated debt
securities are considered by the rating agencies, on balance, to be
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal. These securities generally involve more
credit risk than securities in higher-rating categories. Even securities
rated "BBB" by S&P or by Moody's ratings which are considered
investment-grade, possess some speculative characteristics.
Investment practices and risk levels are carefully monitored. Every attempt is
made to ensure that the risk exposure for each Portfolio remains within the
parameters of its objective. The following is a list of the types of risks that
may apply to a given Portfolio. Additional information about these practices is
available in the Statement of Additional Information.
Counter-Party Risk - The risk that the other party in a repurchase agreement or
other transaction will not fulfill its contract obligation.
Credit Risk - The risk that the issuer of a debt security will be unable to make
interest payments or repay principal on schedule. If an issuer does default, the
affected security could lose all of its value, or be renegotiated at a lower
interest rate or principal amount. Affected securities might also lose
liquidity. Credit risk also includes the risk that a party in a transaction may
not be able to complete the transaction as agreed.
Currency Risk - The risk that a change in the exchange rate between U.S. dollars
and a foreign currency may reduce the value of an investment made in a security
denominated in that foreign currency.
Diplomatic Risk - The risk that an adverse change in the diplomatic relations
between the United States and another country might reduce the value or
liquidity of investments in either country.
Emerging Market Risk - The risk that the emerging market may be more sensitive
to certain economic changes. For example, emerging market countries are more
often dependent on international trade and are therefore often vulnerable to
recessions in other countries. They may have obsolete financial systems, have
volatile currencies and maybe more sensitive than more mature markets to a
variety of economic factors. Emerging market securities may also be less liquid
than securities of more developed countries and could be difficult to sell,
particularly during a market downturn.
Experience Risk - The risk presented by a new or innovative security. The risk
is that insufficient experience exists to forecast how the security's value
might be affected by various economic conditions.
Foreign Risk - The risk that foreign investments may be subject to political and
economic instability, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, or nationalization, increased
taxation or confiscation of investors' assets. Also, the risk that the price of
a foreign issuer's securities may not reflect the issuer's condition because
there is not sufficient publicly available information about the issues. This
risk may be greater for investments in issuers in emerging or developing
markets.
Information Risk - The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Index Risk - The risk that a portfolio designed to replicate the performance of
an index of securities will replicate the performance of the index during
adverse market conditions because the portfolio manager is not permitted to take
a temporary defensive position or otherwise vary the Portfolio's investments to
respond to the adverse market conditions.
Interest Rate Risk - The risk that changes in interest rates can reduce the
value of an existing security. Generally, when interest rates increase, the
value of a debt security decreases. The effect is usually more pronounced for
securities with longer dates to maturity.
Leverage Risk - The risk that an investment practice, such as lending portfolio
securities or engaging in forward commitment or when issued securities
transactions, may increase a Portfolio's exposure to market risk, interest rate
risk or other risks by, in effect, increasing assets available for investment.
Liquidity Risk - The risk that a security cannot be sold at the time desired, or
cannot be sold without adversely affecting the price.
Market Risk - The risk that the value of a stock, bond or other security will be
reduced by market activity. This is a basic risk associated with all securities.
Political Risk - The risk that political actions, events or instability may be
unfavorable for investments made in a particular nation's or region's industry,
government or markets.
Prepayment Risk - The risk that consumers will accelerate their prepayment of
mortgage loans or other receivable, which can shorten the maturity of a
mortgage-backed or other asset-backed security, and reduce a portfolio's return.
Regulatory Risk - The risk that changes in government regulations will adversely
affect the value of a security. Also the risk that an insufficiently regulated
market might permit inappropriate trading practices.
Small Company Risk - The risk that investments in smaller companies may be more
volatile than investments in larger companies. Smaller companies may have higher
failure rates than larger companies. A small company's securities may be hard to
sell because the trading volume of the securities of smaller companies is
normally lower than that of larger companies. Short term changes in the demand
for the securities of small companies may have a disproportionate effect on
their market price, tending to make prices of these securities fall more in
response to selling pressure.
ITEM 5: MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The response to Item 5 has been omitted pursuant to paragraph (B)(2)(b) of the
General Instructions to Form N-1A.
ITEM 6: MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
A number of different entities provide services to the Portfolios. This sections
shows how the Portfolios are organized, lists the entities that perform
different services, and explains how these service providers are compensated.
About Wells Fargo Core Trust
The Trust was organized as a Delaware business trust on March 10, 1999. The
Board of Trustees of the Trust supervises each Portfolio's activities, monitors
its contractual arrangements with various service providers and decides upon
matters of general policy.
The Trust was established to continue the operations of the existing Portfolios
of Core Trust (Delaware) ("CT") in newly established Portfolios. The Trustees
established fourteen Portfolios for the Trust, each of which having a direct
correlation to one corresponding CT Portfolio.
The Investment Advisor
Wells Fargo provides portfolio management and fundamental security analysis
services as the advisor for each of the Funds. Wells Fargo, founded in 1852, is
the oldest bank in the western United States and is one of largest banks in the
United States. Wells Fargo is a wholly owned subsidiary of Wells Fargo &
Company, a national bank holding company. As of June 30, 2000, Wells Fargo and
its affiliates provided advisory services for over $160.5 billion in assets. For
providing these services, Wells Fargo is entitled to receive fees as described
below:
<TABLE>
<S> <C>
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Wells Fargo
Core Trust Portfolios Advisory Fees
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Disciplined Growth Portfolio 0.75
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Index Portfolio 0.15
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Equity Income Portfolio 0.75
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
International Portfolio 1.00
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
International Equity Portfolio 1.00
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Large Company Growth Portfolio 0.75
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Managed Fixed Income Portfolio 0.50
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Positive Return Bond Portfolio 0.50
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Small Cap Index Portfolio 0.25
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Small Cap Value Portfolio 0.90
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Small Company Growth Portfolio 0.90
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Small Company Value Portfolio 0.90
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Stable Income Portfolio 0.50
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
Strategic Value Bond Portfolio 0.50
--------------------------------------------------------- ---------------------
</TABLE>
The Sub-Advisors
Wells Capital Management ("WCM"), a wholly owned subsidiary of Wells Fargo, is
the sub-advisor for the Equity Income, Index, International Equity, and Small
Cap Index Portfolios. In this capacity, it is responsible for the day-to-day
investment management activities of the Funds. As of June 30, 2000, WCM provided
advisory services for over $80 billion in assets. WCM is located at 525 Market
Street, San Francisco, California 94163.
Galliard Capital Management, Inc. ("Galliard"), an investment advisor subsidiary
of Norwest Bank Minnesota, N.A., is the investment sub-advisor for the Managed
Fixed Income, Stable Income and Strategic Value Bond Portfolios. As of June 30,
2000, Galliard managed approximately $6.4 billion in assets. Galliard is located
at 800 LaSalle Avenue, Suite 2060, Minneapolis, Minnesota 55479.
Peregrine Capital Management, Inc. ("Peregrine"), a wholly owned subsidiary of
Norwest Bank Minnesota, N.A., is a sub-advisor for the Large Company Growth,
Positive Return Bond, Small Company Growth and Small Company Value Portfolios.
Peregrine, which is located at LaSalle Plaza, 800 LaSalle Avenue, Suite 1850,
Minneapolis, Minnesota 55402, is an investment adviser subsidiary of Norwest
Bank Minnesota, N.A. Peregrine provides investment advisory services to
corporate and public pension plans, profit sharing plans, savings investment
plans and 401(k) plans. As of December 31, 1999, Peregrine managed approximately
$8.1 billion in assets.
Smith Asset Management Group, LP ("Smith Group") is the sub-advisor for the
Disciplined Growth and the Small Cap Value Portfolios. Smith Group is a
registered investment adviser, whose principal business address is 500 Crescent
Court, Suite 250, Dallas, Texas 75201. Smith Group provides investment
management services to company retirement plans, foundations, endowments, trust
companies, and high net worth individual using a disciplined equity style. As of
June 30, 1999, the Smith Group managed over $1 billion in assets.
Schroder Investment Management, North America Inc. ("Schroder") is the
sub-advisor for the International Portfolio. Schroder, whose principal business
address is 787 Seventh Avenue, New York, New York 10019 is a registered
investment adviser. Schroder provides investment management services to company
retirement plans, foundations, endowments, trust companies and high net worth
individuals. As of September 30, 1999, Schroder managed $36.1 billion in assets.
The Administrator
Wells Fargo provides the Portfolios with administration services, including
general supervision of each Portfolio's operation, coordination of the other
services provided to each Portfolio, compilation of information for reports to
the SEC and the state securities commissions, preparation of proxy statements
and shareholder reports, and general supervision of data compilation in
connection with preparing periodic reports to the Trust's Trustees and officers.
Wells Fargo also furnishes office space and certain facilities to conduct each
Portfolio's business.
The Transfer Agent
Boston Financial Data Services, Inc. ("BFDS") provides transfer agency services
to the Portfolios. For providing these services, BFDS receives an annual fee,
certain transaction-related fees, and is reimbursed for out-of-pocket expenses
incurred on behalf of the Portfolios.
Portfolio Managers`
The following persons are primarily responsible for day-to-day management of the
Portfolios, and were responsible for the day-to-day management of their
predecessors since the date noted.
Disciplined Growth Portfolio/Small Cap Value Portfolio - Stephen S. Smith, CFA.
Mr. Smith is Principal and Chief Executive Officer of the Smith Asset Management
Group, L.P. Prior to 1995, Mr. Smith previously served as Senior Portfolio
Manager with NationsBank. Mr. Smith has a BS in Industrial Engineering and a
MBA from the University of Alabama.
Index Portfolio - David D. Sylvester (1996) and Laurie R. White (1996). Mr.
Sylvester has been with Wells Fargo & Company and its predecessors in an
investment management capacity for over 20 years. Mr. Sylvester joined WCM in
1998 as the Firm's Executive Vice President of Liquidity Investments. He
simultaneously held the position of Managing Director for Reserve Asset
Management at Norwest Investment Management, Inc. ("NIM") (since 1997) until
WCM and NIM combined investment advisory services under the WCM name in 1999.
Mr. Sylvester has nearly 25 years of investment experience. He specializes in
portfolio and securities analysis, fixed-income trading and the ability to add
stability and safety through maximizing fund diversification. He also manages
structured and derivative securities, and institutional and personal trust
assets. Mr. Sylvester attended the University of Detroit-Mercy. Ms. White
joined WCM in 1998 as a Principal for the Liquidity Investments Team and
simultaneously was a Director for Reserves Asset Management at NIM (since 1997)
until WCM and NIM combined investment advisory services under the WCM name in
1999. Ms. White specializes in managing short-term securities, along with
structured and derivative securities, and institutional and personal trust
assets. Ms. White received a BA in Political Science from Carleton College and
a MBA from the University of Minnesota.
Income Equity Portfolio - David L. Roberts, CFA (1994) and Gary J. Dunn, CFA
(1994). Mr. Roberts joined WCM in 1998 as the Equity Income Managing Director
and simultaneously held this position at NIM until WCM and NIM combined
investment advisory services under the WCM name in 1999. Mr. Roberts joined
Norwest Corporation in 1972 as a Securities Analyst. He became Assistance Vice
President Portfolio Manager in 1980 and was promoted to Vice President in 1982.
He holds a BA in Mathematics from Carroll College. Mr. Dunn joined WCM in 1998
as Principal for its Equity Income Team. WCM and NIM combined investment
advisory services under the WCM name in 1999. Mr. Dunn formerly was the
Director of Institutional Investments of NIM. He has been associated with
Norwest or its affiliates as a Financial Analyst and Portfolio Manager since
1979. Mr. Dunn received a BA in Economics from Carroll Collage.
International Equity Portfolio - Katherine Schapiro, CFA (1999) and Stacey Ho,
CFA (1999). Ms. Schapiro jointed WCM in 1997 as International Equity Managing
Director. She manages international equity funds and portfolios for WCM's
institutional clients. She joined WCM in 1997 from Wells Fargo Bank where she
was a Portfolio Manager from 1992 to 1997. Ms. Schapiro's 18 years of
investment experience includes investment management from 1988 to 1992 at
Newport Pacific Management, an international advisory firm. Ms. Schapiro
received her BA in Spanish Literature from Stanford University. She was the
past President of the Security Analysts of San Francisco. Ms. Ho joined WCM in
197 as an International Equity Portfolio Manager Portfolio Manager. She manages
international equity funds and portfolios for WCM's institutional clients. In
1995 and 1996 she was an International Equity Portfolio Manager at Clemente
Capital Management, and from 1990 to 1995 she managed Japanese and U.S. equity
portfolios for Edison International. Ms. Ho has over 10 years of international
equity investment management experience. Ms. Ho received BS in Civil
Engineering from San Diego State University, a MS in Environmental Engineering
from Stanford University and a MBA form the University of California at Los
Angeles.
International Portfolio - Michael Perelstein (1997). Mr. Perelstein joined
Schroder in 1997 as a Senior Vice President. Mr. Perelstein currently manages
international portfolios and has more than 22 years of investment experience
that includes more than 15 years specializing in overseas investing. Mr.
Perelstein, along with the Schroder EAFE (Europe, Asia, Far East) Team, manages
more than $7 billion in assets. Prior to 1997, Mr. Perelstein was a Director
and a Managing Director at MacKay-Shields. Mr. Perelstein has a BA in
Economics from Brandies University and a MBA from the University of Chicago.
Large Company Growth Portfolio - John S. Dale, CFA (1994) and Gary E. Nussbaum,
CFA (1998). Mr. Dale joined Peregrine in 1988 as a Senior Vice President and
has managed large company growth portfolios since 1983, currently totaling
assets in excess of $3 billion. Prior to joining Peregrine, Mr. Dale has been
associated with Norwest Bank and its affiliates since 1968. Mr. Dale received
his BA in Marketing from the University of Minnesota. Mr. Nussbaum joined
Peregrine in 1990 as a Vice President and Portfolio Manager where he has
managed large company growth portfolios, currently totaling assets in excess of
$3 billion. Mr. Nussbaum received a BBA in Finance and a MBA from the
University of Wisconsin.
Managed Fixed Income Portfolio - Richard Merriam, CFA (1995) and Ajay Mirza
(1998). Mr. Merriam joined Galliard at the firm's inception in 1995.
Currently, Mr. Merriam is a Managing Partner at Galliard. He is responsible
for investment process and strategy. Prior to joining Galliard, Mr. Merriam
was Chief Investment Officer for Insight Management. Mr. Merriam received a
BA in Economics and English from the University of Michigan and a MBA from the
University of Minnesota. Mr. Mirza joined Galliard at the firm's inception in
1995 as a Portfolio Manager and Mortgage Specialist. Prior to joining
Peregrine, Mr. Mirza was a research analyst at Insight Investment
Management and at Lehman Brothers. Mr. Mirza holds a BE in Instrumentation from
the Birla Institute of Technology (India), a MA in Economics from Tulane
University, and a MBA from the University of Minnesota.
Positive Return Bond Portfolio - William D. Giese, CFA (1994) and Patricia
Burns, CFA (1998). Mr. Giese joined Peregrine more than 10 years ago as a
Senior Vice President and Portfolio Manager. His responsibilities include
overseeing the Positive Return Bond Portfolio. Mr. Giese has more than 20 years
of experience in fixed-income securities management. Mr. Giese received his BS
in Civil Engineering from the Illinois Institute of Technology and a MBA form
the University of Michigan. Ms. Burns joined Peregrine over ten years ago and
is a Senior Vice President and Portfolio Manager for taxable fixed-income
portfolios. She has been associated with Norwest Bank and its
affiliates since 1983. Ms. Burns has a BA in Child Psychology/Sociology and a
MBA from the University of Minnesota.
Small Cap Index Portfolio-- David D. Sylvester (1998) and Laurie R. White
(1998). For a description of Mr. Sylvester's and Ms. White's
experience and backgrounds, see "Index Portfolio."
Small Company Growth Portfolio - Robert B. Mersky, CFA (1994) and Paul E. von
Kuster, CFA(1998). Mr. Mersky is founder, President and a Portfolio Manager at
Peregrine. In 1984, Mr. Mersky and five other Senior Portfolio Managers founded
Peregrine. Mr. Mersky is responsible for Peregrine Small Cap Equity style and
oversees the Small Company Growth Portfolio. Mr. Mersky has actively managed
small cap stocks since 1973. Prior to joining Peregrine, Mr. Mersky has been
associated with Norwest Bank since 1968; and his responsibilities include
Senior Research Analyst, Portfolio Manager, Director of Research and Chief
Investment Officer. Mr. Mersky received his BS in Accounting from the
University of Minnesota. Mr. von Kuster joined Peregrine in 1984 as a
Senior Vice President and Portfolio Manager. Mr. von Kuster has a BA in
Philosophy form Princeton University.
Small Company Value Portfolio - Tasso H. Coin, Jr., CFA (1995) and Douglas G.
Pugh, CFA (1997). Mr. Coin joined Peregrine in 1995 as a Senior Vice President.
Prior to 1995, Mr. Coin was a research officer at Lord Asset Management. Mr.
Coin received his BBA in Economics from Loyola University of Chicago. Mr. Pugh
joined Peregrine in 1997 as a Senior Vice President. Prior to 1997, Mr. Pugh
was a Senior Equity Analyst and Portfolio Manager for Advantus Capital
Management, an investment advisor firm. Mr. Pugh has a BS in Finance and
Business Administration from Drake University and a MBA from the University of
Minnesota.
Stable Income Portfolio - John Huber (1998). Mr. Huber joined Galliard at the
firm's inception in 1995 as a Portfolio Manager. Currently, Mr. Huber is highly
involved with portfolio management, strategy, issue selection and trading. Mr.
Huber specializes in corporate and asset/mortgage-backed securities. Prior to
joining Galliard, Mr. Huber was an Assistant Portfolio Manager with NIM. In
addition, he previously served as a Senior Analyst in Norwest's Capital Market
Credit Group. Mr. Huber received a BA in Communications form the University of
Iowa and a MBA from the University of Minnesota.
Strategic Value Bond Portfolio - Richard Merriam, CFA, John Huber (1998), and
Ajay Mirza (1998). For a description of Mr. Merriam's experience and background,
see "Managed Fixed Income Portfolio." For a description of Mr. Huber's
experience and background, see "Stable Income Portfolio". For a description of
Mr. Mirza's experience, see "Managed Fixed Income Portfolio."
ITEM 7: SHAREHOLDER INFORMATION
PURCHASE OF INTERESTS
Interests in the Portfolios are issued solely in private placement transactions
that do not involve any "public offering" within the meaning of Section 4(2) of
the Securities Act of 1933, as amended ("1933 Act"). All investments in the
Portfolios are made without a sales load, at the NAV next determined after an
order is received by the Portfolio. Investments in the Portfolios may only be
made by certain institutional investors, whether organized within or outside the
United States (excluding individuals, S corporations, partnerships, and grantor
trusts beneficially owned by any individuals, S corporations, or partnerships).
An investor in a Portfolio must also be an "accredited investor," as that term
is defined under Rule 501(a) of Regulation D under the 1933 Act.
The NAV of each Portfolio is determined as of 4:00 P.M., Eastern Time
("Valuation Time"), on all weekdays that the New York Stock Exchange is open
("Business Day"). Net asset value per Interest is calculated by dividing the
aggregate value of the Portfolio's assets less all liabilities by the number of
units of Interests outstanding. All Portfolios value portfolio securities at
current market value if market quotations are readily available. If market
quotations are not readily available, the Portfolios value those securities at
fair value as determined by or pursuant to procedures adopted by the Board.
Each investor in a Portfolio may add to or reduce its investment in the
Portfolio. At the Valuation Time on each Business Day, the value of each
investor's Interest in a Portfolio will be determined by multiplying the
Portfolio's NAV by the percentage, effective for that day, that represents that
investor's share of the aggregate Interests in the Portfolio. Any additions to
or withdrawals of those interests which are to be effected on that day will then
be effected. Each investor's share of the aggregate Interests in the Portfolio
then will be recomputed using the percentage equal to the fraction (1) the
numerator of which is the value of the investor's investment in the Portfolio as
of the Valuation Time on that day plus or minus, as the case may be, the amount
of any additions to or withdrawals from such investment effected on that day and
(2) the denominator of which is the Portfolio's aggregate NAV as of the
Valuation Time on that day plus or minus, as the case may be, the amount of the
net additions to or withdrawals from the aggregate investments in the Portfolio
by all investors. The percentages so determined then will be applied to
determine the value of each investor's respective interest in the Portfolio as
of the Valuation Time on the following Business Day.
Trading in securities on European, Far Eastern and other international
securities exchanges and over-the-counter markets is normally completed well
before the close of business of each Business Day. Trading in foreign
securities, however, may not take place on all Business Days or may take place
on days other than Business Days. The determination of the prices of foreign
securities may be based on the latest market quotations for the securities
markets. If events occur that affect the securities' value after the close of
the markets on which they trade, the Portfolios may make adjustments to the
value of the securities for purposes of determining net asset value.
For purposes of determining NAV, the Portfolios convert all assets and
liabilities denominated in foreign currencies into U.S. dollars at the mean of
the bid and asked prices of such currencies against the U.S. dollar last quoted
by a major bank prior to the time of conversion.
There is no minimum initial or subsequent investment amount in a Portfolio.
However, since each Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the return on its assets, investments
must be made in federal funds (i.e., monies credited to the account of the
Trust's custodian by a Federal Reserve Bank).
Stephens Inc. ("Stephens" or "Distributor") with principal offices at 111 Center
Street, Little Rock, Arkansas 72201, serves as the distributor of the Trust. The
Trust reserves the right to reject any purchase order for any reason.
REDEMPTION OR REPURCHASE OF INTERESTS
An investor in a Portfolio may withdraw all or any portion of its investment in
the Portfolio at the NAV next determined after a withdrawal request in proper
form is furnished by the investor to the Trust. The proceeds of a withdrawal
generally will be paid by the Portfolio in federal funds normally on the
business day after the withdrawal is effected, but in any event within seven
days. Investments in a Portfolio may not be transferred. The right of redemption
may not be suspended nor the payment dates postponed for more than seven days
except when the New York Stock Exchange is closed (or when trading thereon is
restricted) for any reason other than its customary weekend or holiday closings
or under any emergency or other circumstances as determined by the SEC.
Redemptions from a Portfolio may be made wholly or partially in portfolio
securities. The Trust has filed an election with the SEC pursuant to which each
Portfolio will only consider effecting a redemption in portfolio securities if
the particular interestholder is redeeming more than $250,000 or 1% of the
Portfolio's NAV, whichever is less, during any 90-day period.
DISTRIBUTIONS
A Portfolio's net income consists of (1) all dividends, accrued interest
(including earned discount, both original issue and market discount), and other
income, including any net realized gains on the Portfolio's assets, less (2) all
actual and accrued expenses of the Portfolio, amortization of any premium, and
net realized losses on the Portfolio's assets, all as determined in accordance
with generally accepted accounting principles. All of a Portfolio's net income
is allocated pro rata among the investors in the Portfolio. A Portfolio's net
income generally is not distributed to the investors in the Portfolio, except as
determined by the Trustees from time to time, but instead is included in the NAV
of the investors' respective Interests in the Portfolio.
TAXES
Each Portfolio has been and will continue to be operated in a manner so as to
qualify it as a non-publicly traded partnership for federal income tax purposes.
Provided that a Portfolio so qualifies, it will not be subject to any federal
income tax on its income and gain (if any). However, each investor in the
Portfolio will be taxable on its distributive share of the Portfolio's taxable
income in determining its federal income tax liability. As a non-publicly traded
partnership, the Portfolio will be deemed to have "passed through" to
interestholders any interests, dividends, gains or losses. The determination of
such share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder. All Portfolios
will have less than 100 investors.
It is intended that each Portfolio's assets, income and distribution will be
managed in such a way that an entity electing and qualifying as a "regulated
investment company" under the Code can continue to so qualify by investing
substantially all of its assets through a Portfolio, provided that the regulated
investment company meets other requirements for such qualification not within
the control of the Portfolio (e.g., distributing at least 90% of the regulated
investment company's "investment company taxable income" annually).
Investor inquiries should be directed to Stephens.
ITEM 8: DISTRIBUTION ARRANGEMENTS.
The Trust is registered as an open-end management investment company under the
1940 Act. The Trust was organized as a Delaware business trust. Investors in the
Trust will each be liable for all obligations of the Trust. However, the risk of
an investor incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Trust itself
was unable to meet its obligations. The Trust's Declaration of Trust authorizes
the Board of Trustees to issue Interests and to establish and designate such
Interests into one or more Portfolios. Interests may be purchased only by
institutional investors which are "accredited investors" within the meaning of
Regulation D under the 1933 Act, and may not be purchased by individuals, S
corporations, partnerships or grantor trusts.
A discussion of the risk factors, objectives and other investment aspects in a
Private Fund will include all aspects of an investment in the corresponding
Portfolio. In this registration statement, the discussion of risk factors which
apply to an investment by a Portfolio shall include the risk factors which apply
to an investment by a Private Fund.
The business and affairs of the Trust are managed under the direction of its
Board of Trustees. The office of the Trust is located at 525 Market Street, San
Francisco, California 94163.
ITEM 9: FINANCIAL HIGHLIGHTS INFORMATION
The response to Item 9 has been omitted pursuant to paragraph (B)(2)(b) of the
General Instructions to Form N-1A.
<PAGE>
Part B
WELLS FARGO CORE TRUST
PRIVATE PLACEMENT MEMORANDUM
Disciplined Growth Portfolio
Index Portfolio
Equity Income Portfolio
International Equity Portfolio
International Portfolio
Large Company Growth Portfolio
Managed Fixed Income Portfolio
Positive Return Bond Portfolio
Small Cap Index Portfolio
Small Cap Value Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Stable Income Portfolio
Strategic Value Bond Portfolio
October 2, 2000
ITEM 10. COVER PAGE AND TABLE OF CONTENTS.
This Part B is not a prospectus. It is intended to provide additional
information regarding the fourteen Portfolios of Wells Fargo Core Trust (the
"Trust") and should be read in conjunction with the Trust's Part A dated October
2, 2000. All terms used in Part B that are defined in Part A will have the same
meanings assigned in Part A. Copies of Part A may be obtained without charge by
calling 1-800-222-8222 or writing to Wells Fargo Funds, P.O. Box 8266, Boston,
MA 02266-8266.
<TABLE>
<S> <C>
TABLE OF CONTENTS
THE TRUST HISTORY........................................................................................3
DESCRIPTION OF THE TRUST, PORTFOLIOS, INVESTMENTS AND RISKS..............................................3
FUNDAMENTAL INVESTMENT POLICIES..........................................................................3
NON-FUNDAMENTAL INVESTMENT POLICIES......................................................................5
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS..........................................................6
MANAGEMENT OF THE TRUST.................................................................................26
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.....................................................28
INVESTMENT ADVISORY AND OTHER SERVICES..................................................................31
BROKERAGE ALLOCATION AND OTHER PRACTICES................................................................37
CAPITAL STOCK AND OTHER SECURITIES......................................................................38
Description of Interests.........................................................................38
PURCHASE, REDEMPTION AND PRICING OF SHARES..............................................................39
DETERMINATION OF NET ASSET VALUE........................................................................41
TAXATION................................................................................................41
UNDERWRITERS............................................................................................42
CALCULATION OF PERFORMANCE DATA.........................................................................42
FINANCIAL STATEMENTS....................................................................................42
SCHEDULE A - DESCRIPTION OF RATINGS....................................................................A-1
</TABLE>
<PAGE>
ITEM 11. TRUST HISTORY
In November 1998 the parent holding company of Wells Fargo Bank, N.A.
("Wells Fargo" or "Advisor"), advisor to the Stagecoach funds, merged with the
parent holding company of Norwest Investment Management, Inc., the advisor to
the Norwest funds. Management and shareholders of both the Stagecoach Funds
Family and the Norwest Funds Family approved a merger of the existing funds from
both fund families into successor funds that are series of three newly formed
investment companies registered under the 1940 Act. Core Trust was established
to continue the operations of certain existing Portfolios of Core Trust
(Delaware) ("CT") in newly established Portfolios. The Trustees established
fourteen Portfolios of the Trust, each having a direct correlation to one
corresponding CT Portfolio.
ITEM 12. DESCRIPTION OF THE TRUST, PORTFOLIOS, INVESTMENTS AND RISKS
The Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust
was organized as a Delaware business trust on March 10, 1999. The Trust's
Declaration of Trust authorizes the Board of Trustees to issue an unlimited
number of beneficial interests ("Interests") and to establish and designate such
Interests into one or more portfolios ("Portfolios"). Interests may be purchased
only by institutional investors which are "accredited investors" within the
meaning of Regulation D under the Securities Act of 1933, as amended (the "1933
Act"), and may not be purchased by individuals, S corporations, partnerships or
grantor trusts. The number of investors for each Portfolio may not exceed 100.
The Trust is currently comprised of fourteen separate series (each, a
"Portfolio"): Disciplined Growth Portfolio, Index Portfolio, Equity Income
Portfolio, International Equity Portfolio, International Portfolio, Large
Company Growth Portfolio, Managed Fixed Income Portfolio, Positive Return Bond
Portfolio, Small Cap Index Portfolio, Small Cap Value Portfolio, Small Company
Growth Portfolio, Small Company Value Portfolio, Stable Income Portfolio and
Strategic Value Bond Portfolio. Each Portfolio is "diversified" as defined in
the 1940 Act.
FUNDAMENTAL INVESTMENT POLICIES:
Each Portfolio has adopted the following investment policies, all of
which are fundamental policies; that is, they may not be changed, without
approval by the holders of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Portfolio.
The Portfolios may not:
(1) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase and as
a result thereof, the value of a Portfolio's investments in that industry would
equal or exceed 25% of the current value of the Portfolio's total assets,
provided that this restriction does not limit a Portfolio's investments in (i)
securities issued or guaranteed by the United States Government, its agencies or
instrumentalities, (ii) securities of other investment companies, (iii)
municipal securities, or (iv) repurchase agreements, and provided further that
(v) the Index Portfolio reserves the right to concentrate in any industry in
which the S&P 500 Index becomes concentrated to the same degree during the same
period and (vi) the Small Cap Index Portfolio reserves the right to concentrate
in any industry in which the S&P 600 Small Cap Index becomes concentrated to the
same degree during the same period;
(2) purchase securities of any issuer if, as a result, with respect to
75% of a Portfolio's total assets, more than 5% of the value of its total assets
would be invested in the securities of any one issuer or the Portfolio's
ownership would be more than 10% of the outstanding voting securities of such
issuer, provided that this restriction does not limit a Portfolio's investments
in securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities, or investments in securities of other investment companies;
(3) borrow money, except to the extent permitted under the 1940
Act, including the rules, regulations and any orders obtained thereunder;
(4) issue senior securities, except to the extent permitted under
the 1940 Act, including the rules, regulations and any orders obtained
thereunder;
(5) make loans to other parties if, as a result, the aggregate value of
such loans would exceed one-third of a Portfolio's total assets. For the
purposes of this limitation, entering into repurchase agreements, lending
securities and acquiring any debt securities are not deemed to be the making of
loans;
(6) underwrite securities of other issuers, except to the extent that
the purchase of permitted investments directly from the issuer thereof or from
an underwriter for an issuer and the later disposition of such securities in
accordance with a Portfolio's investment program may be deemed to be an
underwriting;
(7) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Portfolio from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business); nor
(8) purchase or sell commodities, provided that (i) currency will not
be deemed to be a commodity for purposes of this restriction, (ii) this
restriction does not limit the purchase or sale of futures contracts, forward
contracts or options, and (iii) this restriction does not limit the purchase or
sale of securities or other instruments backed by commodities or the purchase or
sale of commodities acquired as a result of ownership of securities or other
instruments.
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NON-FUNDAMENTAL INVESTMENT POLICIES
Each Portfolio has adopted the following non-fundamental policies which
may be changed by a vote of a majority of the Trustees of the Trust or at any
time without approval of such Portfolio's Interest holders;
(1) Each Portfolio may invest in shares of other investment companies to the
extent permitted under the 1940 Act, including the rules, regulations and
exemptions thereunder, provided however, that no Portfolio that has knowledge
that its Interests are purchased by another investment company investor pursuant
to Section 12(d)(1)(G) of the 1940 Act will acquire any securities of registered
open-end management investment companies or registered unit investment trusts in
reliance on Section 12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act, and provided
further that any Portfolio that has knowledge that its Interests are purchased
by another investment company pursuant to an exemptive order relating to Section
12(d)(1) of the 1940 Act that precludes underlying portfolios from acquiring any
securities of any other investment company in excess of the limits contained in
Section 12(d)(1)(A) of the 1940 Act, except for securities received as a
dividend or as a result of a plan of reorganization of any company will limit
its acquisition of securities of other investment companies accordingly.
(2) Each Portfolio may not invest or hold more than 15% of the Portfolio's net
assets in illiquid securities. For this purpose, illiquid securities include,
among others, (a) securities that are illiquid by virtue of the absence of a
readily available market or legal or contractual restrictions on resale, (b)
fixed time deposits that are subject to withdrawal penalties and that have
maturities of more than seven days, and (c) repurchase agreements not terminable
within seven days;
(3) Each Portfolio may invest in futures or options contracts regulated by the
U.S. Commodity Futures Trading Commission ("CFTC") for (i) bona fide hedging
purposes within the meaning of the rules of the CFTC and (ii) for other purposes
if, as a result, no more than 5% of the Portfolio's net assets would be invested
in initial margin and premiums (excluding amounts "in-the-money") required to
establish the contracts;
(4) Each Portfolio may lend securities from its portfolio to approved brokers,
dealers and financial institutions, to the extent permitted under the 1940 Act,
including the rules, regulations and exemptions thereunder, which currently
limit such activities to one-third of the value of a Portfolio's total assets
(including the value of the collateral received). Any such loans of portfolio
securities will be fully collateralized based on values that are
marked-to-market daily;
(5) Each Portfolio may not make investments for the purpose of exercising
control or management, provided that this restriction does not limit a
Portfolio's investment in securities of other investment companies or
investments in entities created under the laws of foreign countries to
facilitate investment in securities of that country;
(6) Each Portfolio may not purchase securities on margin (except for s
hort-term credits necessary for the clearance of transactions); and
(7) Each Portfolio may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short (short sales "against the box"), and provided that transactions in futures
contracts and options are not deemed to constitute selling securities short.
General
Notwithstanding the foregoing policies, any other investment companies
in which the Portfolios may invest have adopted their own investment policies,
which may be more or less restrictive than those listed above, thereby allowing
a Portfolio to participate in certain investment strategies indirectly that are
prohibited under the fundamental and non-fundamental investment policies listed
above.
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS
Additional information on the particular types of securities in which certain
Portfolios may invest in is set forth below.
Asset-Backed Securities
The Portfolios may invest in various types of asset-backed securities.
Asset-backed securities are securities that represent an interest in an
underlying security. The asset-backed securities in which the Portfolios invest
may consist of undivided fractional interests in pools of consumer loans or
receivables held in trust. Examples include certificates for automobile
receivables (CARS) and credit card receivables (CARDS). Payments of principal
and interest on these asset-backed securities are "passed through" on a monthly
or other periodic basis to certificate holders and are typically supported by
some form of credit enhancement, such as a surety bond, limited guaranty, or
subordination. The extent of credit enhancement varies, but usually amounts to
only a fraction of the asset-backed security's par value until exhausted.
Ultimately, asset-backed securities are dependent upon payment of the consumer
loans or receivables by individuals, and the certificate holder frequently has
no recourse to the entity that originated the loans or receivables. The actual
maturity and realized yield will vary based upon the prepayment experience of
the underlying asset pool and prevailing interest rates at the time of
prepayment. Asset-backed securities are relatively new instruments and may be
subject to greater risk of default during periods of economic downturn than
other instruments. Also, the secondary market for certain asset-backed
securities may not be as liquid as the market for other types of securities,
which could result in a Portfolio experiencing difficulty in valuing or
liquidating such securities.
Bank Obligations
The Portfolios may invest in bank obligations, including certificates
of deposit, time deposits, bankers' acceptances and other short-term obligations
of domestic banks, foreign subsidiaries of domestic banks, foreign branches of
domestic banks, and domestic and foreign branches of foreign banks, domestic
savings and loan associations and other banking institutions. With respect to
such securities issued by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, and domestic and foreign branches of foreign
banks, a Portfolio may be subject to additional investment risks that are
different in some respects from those incurred by a Portfolio which invests only
in debt obligations of U.S. domestic issuers. Such risks include possible future
political and economic developments, the possible imposition of foreign
withholding taxes on interest income payable on the securities, the possible
establishment of exchange controls or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on these securities and the possible seizure or nationalization of foreign
deposits. In addition, foreign branches of U.S. banks and foreign banks may be
subject to less stringent reserve requirements and to different accounting,
auditing, reporting and recordkeeping standards than those applicable to
domestic branches of U.S. banks.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by a Portfolio will not benefit from insurance from
the Bank Insurance Fund or the Savings Association Insurance Fund administered
by the Federal Deposit Insurance Corporation ("FDIC"). Bankers' acceptances are
credit instruments evidencing the obligation of a bank to pay a draft drawn on
it by a customer. These instruments reflect the obligation both of the bank and
of the drawer to pay the face amount of the instrument upon maturity. The other
short-term obligations may include uninsured, direct obligations, bearing fixed,
floating- or variable-interest rates.
Below Investment Grade Investments
A Portfolio may invest in debt securities that are in low or below
investment grade categories, or are unrated or in default at the time of
purchase (also known as high yield securities or "junk bonds"). Such debt
securities have a much greater risk of default (or in the case of bonds
currently in default, of not returning principal) and are more volatile than
higher-rated securities of similar maturity. The value of such debt securities
will be affected by overall economic conditions, interest rates, and the
creditworthiness of the individual issuers. Additionally, these lower rated debt
securities may be less liquid and more difficult to value than higher rated
securities.
Stocks of the smaller and medium-sized companies in which the Fund may
invest may be more volatile than larger company stocks. Investments in foreign
markets may also present special risks, including currency, political,
diplomatic, regulatory and liquidity risks.
Bonds
The Portfolios may invest in bonds. A bond is an interest-bearing
security issued by a company or governmental unit. The issuer of a bond has a
contractual obligation to pay interest at a stated rate on specific dates and to
repay principal (the bond's face value) periodically or on a specified maturity
date. An issuer may have the right to redeem or "call" a bond before maturity,
in which case the investor may have to reinvest the proceeds at lower market
rates. The value of fixed-rate bonds will tend to fall when interest rates rise
and rise when interest rates fall. The value of "floating-rate" or
"variable-rate" bonds, on the other hand, fluctuate much less in response to
market interest rate movements than the value of fixed rate bonds.
Bonds may be senior or subordinated obligations. Senior obligations
generally have the first claim on a corporation's earnings and assets and, in
the event of liquidation, are paid before subordinated debt. Bonds may be
unsecured (backed only by the issuer's general creditworthiness) or secured
(also backed by specified collateral).
Borrowing
The Portfolios may borrow money for temporary or emergency purposes,
including the meeting of redemption requests. Borrowing involves special risk
considerations. Interest costs on borrowings may fluctuate with changing market
rates of interest and may partially offset or exceed the return earned on
borrowed funds (or on the assets that were retained rather than sold to meet the
needs for which funds were borrowed). Under adverse market conditions, a
Portfolio might have to sell portfolio securities to meet interest or principal
payments at a time when investment considerations would not favor such sales.
Reverse repurchase agreements, short sales not against the box, dollar roll
transactions and other similar investments that involve a form of leverage have
characteristics similar to borrowings but are not considered borrowings if the
Portfolio maintains a segregated account.
Commercial Paper
The Portfolios may invest in commercial paper (including variable
amount master demand notes) which refers to short-term, unsecured promissory
notes issued by corporations to finance short-term credit needs. Commercial
paper is usually sold on a discount basis and has a maturity at the time of
issuance not exceeding nine months. Variable amount master demand notes are
demand obligations which permit the investment of fluctuating amounts at varying
market rates of interest pursuant to arrangements between the issuer and a
commercial bank acting as agent for the payee of such notes whereby both parties
have the right to vary the amount of the outstanding indebtedness on the notes.
Investments by the Portfolios in commercial paper (including variable rate
demand notes and variable rate master demand notes issued by domestic and
foreign bank holding companies, corporations and financial institutions, as well
as similar instruments issued by government agencies and instrumentalities) will
consist of issues that are rated in one of the two highest rating categories by
a nationally recognized statistical ratings organization ("NRSRO"). Commercial
paper may include variable- and floating-rate instruments.
Closed-End Investment Companies
The Portfolios may invest in the securities of closed-end investment
companies that invest primarily in foreign securities. Because of restrictions
on direct investment by U.S. entities in certain countries, other investment
companies may provide the most practical or only way for the Portfolio to invest
in certain markets. The Portfolios will invest in such companies when, in the
Advisor's judgment, the potential benefits of the investment justify the payment
of any applicable premium or sales charge. Other investment companies incur
their own fees and expenses.
Convertible Securities
The Portfolios may invest in convertible securities that provide
current income and are issued by companies with the characteristics described
above for each Portfolio and that have a strong earnings and credit record. The
Portfolios may purchase convertible securities that are fixed-income debt
securities or preferred stocks, and which may be converted at a stated price
within a specified period of time into a certain quantity of the common stock of
the same issuer. Convertible securities, while usually subordinate to similar
nonconvertible securities, are senior to common stocks in an issuer's capital
structure. Convertible securities offer flexibility by providing the investor
with a steady income stream (which generally yield a lower amount than similar
nonconvertible securities and a higher amount than common stocks) as well as the
opportunity to take advantage of increases in the price of the issuer's common
stock through the conversion feature. Fluctuations in the convertible security's
price can reflect changes in the market value of the common stock or changes in
market interest rates.
Custodial Receipts for Treasury Securities
The Portfolios may purchase participations in trusts that hold U.S.
Treasury securities (such as TIGRs and CATS) or other obligations where the
trust participations evidence ownership in either the future interest payments
or the future principal payments on the obligations. These participations are
normally issued at a discount to their "face value," and can exhibit greater
price volatility than ordinary debt securities because of the way in which their
principal and interest are returned to investors.
Derivative Securities
The Portfolios may invest in various instruments that may be considered
"derivatives," including structured notes, bonds or other instruments with
interest rates that are determined by reference to changes in the value of other
interest rates, indices or financial indicators ("References") or the relative
change in two or more References. Some derivative securities represent
relatively recent innovations in the bond markets, and the trading market for
these instruments is less developed than the markets for traditional types of
debt instruments. It is uncertain how these instruments will perform under
different economic and interest rate scenarios. Because certain of these
instruments are leveraged, their market values may be more volatile than other
types of bonds and may present greater potential for capital gain or loss.
Derivative securities and their underlying instruments may experience periods of
illiquidity, which could cause a Fund to hold a security it might otherwise sell
or could force the sale of a security at inopportune times or for prices that do
not reflect current market value. The possibility of default by the issuer or
the issuer's credit provider may be greater for these structured and derivative
instruments than for other types of instruments. As new types of derivative
securities are developed and offered to investors, the advisor will, consistent
with the Funds' investment objective, policies and quality standards, consider
making investments in such new types of derivative securities.
Derivative Securities: Futures and Options Contracts
The Portfolios may invest in futures and options contracts. Futures and
options contracts are types of "derivative securities," securities which derive
their value, at least in part, from the price of another security or asset, or
the level of an index or a rate. As is described in more detail below, a
Portfolio often invests in these securities as a "hedge" against fluctuations in
the value of the other securities that the Portfolio holds, although a Portfolio
may also invest in certain derivative securities for investment purposes only.
While derivative securities are useful for hedging and investment, they
also carry additional risks. A hedging policy may fail if the correlation
between the value of the derivative securities and the Portfolio's other
investments does not follow the Advisor's expectations. If the Advisor's
expectations are not met, it is possible that the hedging strategy will not only
fail to protect the value of the Portfolio's investments, but the Portfolio may
also lose money on the derivative security itself. Also, derivative securities
are more likely to experience periods when they will not be readily tradable.
If, as a result of such illiquidity, a Portfolio cannot settle a future or
option contract at the time the Advisor determines is optimal, the Portfolio may
lose money on the investment. Additional risks of derivative securities include:
the risk of the disruption of the Portfolios' ability to trade in derivative
securities because of regulatory compliance problems or regulatory changes;
credit risk of counterparties to derivative contracts; and market risk (i.e.,
exposure to adverse price changes).
The Advisor uses a variety of internal risk management procedures to
ensure that derivatives use is consistent with a Portfolio's investment
objectives, does not expose a Portfolio to undue risk and is closely monitored.
These procedures include providing periodic reports to the Board of Trustees
concerning the use of derivatives.
The use of derivatives by a Portfolio also is subject to broadly
applicable investment policies. For example, a Portfolio may not invest more
than a specified percentage of its assets in "illiquid securities," including
those derivatives that do not have active secondary markets. Nor may a Portfolio
use certain derivatives without establishing adequate "cover" in compliance with
the U.S. Securities and Exchange Commission ("SEC") rules limiting the use of
leverage.
Futures Contracts. The Portfolios may trade futures contracts and
options on futures contracts. A futures transaction involves a firm agreement to
buy or sell a commodity or financial instrument at a particular price on a
specified future date. Futures contracts are standardized and exchange-traded,
where the exchange serves as the ultimate counterparty for all contracts.
Consequently, the only credit risk on futures contracts is the creditworthiness
of the exchange.
The purchaser or seller of a futures contract is not required to
deliver or pay for the underlying instrument unless the contract is held until
the delivery date. However, both the purchaser and seller are required to
deposit "initial margin" with a futures broker when the parties enter into the
contract. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that party
will be required to make additional "variation margin" payments to settle the
change in value on a daily basis. The party that has a gain may be entitled to
receive all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a Portfolio's
investment limitations. In the event of the bankruptcy of the broker that holds
the margin on behalf of a Portfolio, the Portfolio may not receive a full refund
of its margin.
Although the Portfolios intend to purchase or sell futures contracts only if
there is an active market for such contracts, a liquid market may not exist for
a particular contract at a particular time. Many futures exchanges and boards of
trade limit the amount of fluctuation permitted in futures contract prices
during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that limit
or trading may be suspended for specified periods during the trading day.
Futures contracts prices could move to the limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subject a Portfolio to substantial losses. If it is
not possible, or a Portfolio determines not to close a futures position in
anticipation of adverse price movements, the Portfolio may be required to pay
additional variation margin until the position is closed.
The Portfolios may also purchase options on futures contracts. See
"Options Trading" below.
Foreign Currency Futures Contracts and Foreign Currency Transactions.
The Portfolios can invest in foreign currency futures contracts and foreign
currency transactions which entail the same risks as other futures contracts as
described above, but have the additional risks associated with international
investing. Similar to other futures contracts, a foreign currency futures
contract is an agreement for the future delivery of a specified currency at a
specified time and at a specified price, will be secured by margin deposits, are
regulated by the CFTC and are traded on designated exchanges. A Portfolio will
incur brokerage fees when it purchases and sells futures contracts.
Foreign currency transactions, such as forward foreign currency
exchange contracts, are also contracts for the future delivery of a specified
currency at a specified time and at a specified price. These transactions differ
from futures contracts in that they are usually conducted on a principal basis
instead of through an exchange, and therefore there are no brokerage fees,
margin deposits are negotiated between the parties, and the contracts are
settled through different procedures. The Advisor, considers on an ongoing basis
the creditworthiness of the institutions with which the Portfolio enters into
foreign currency transactions. Despite these differences, however, foreign
currency futures contracts and foreign currency transactions (together,
"Currency Futures") entail largely the same risks, and therefore the remainder
of this section will describe the two types of securities together.
Because the Portfolios may invest in securities denominated in
currencies other than the U.S. dollar and may temporarily hold Portfolios in
bank deposits or other money market investments denominated in foreign
currencies, they may be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rate between such currencies and the
dollar. Changes in foreign currency exchange rates influence values within the
Portfolio from the perspective of U.S. investors. The rate of exchange between
the U.S. dollar and other currencies is determined by the forces of supply and
demand in the foreign exchange markets. The international balance of payments
and other economic and financial conditions, government intervention,
speculation and other factors affect these forces.
A Portfolio will purchase and sell Currency Futures in order to hedge
its portfolio and to protect it against possible variations in foreign exchange
rates pending the settlement of securities transactions. If a fall in exchange
rates for a particular currency is anticipated, a Portfolio may sell a Currency
Future as a hedge. If it is anticipated that exchange rates will rise, a
Portfolio may purchase a Currency Future to protect against an increase in the
price of securities denominated in a particular currency the Portfolio intends
to purchase. These Currency Futures will be used only as a hedge against
anticipated currency rate changes. Although such contracts are intended to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.
The use of Currency Futures involves the risk of imperfect correlation
between movements in futures prices and movements in the price of currencies
which are the subject of the hedge. The successful use of Currency Futures
strategies also depends on the ability of the Advisor to correctly forecast
interest rate movements, currency rate movements and general stock market price
movements. There can be no assurance that the Advisor's judgment will be
accurate. The use of Currency Futures also exposes a Portfolio to the general
risks of investing in futures contracts: the risk of an illiquid market for the
Currency Futures, the risk of exchange-imposed trading limits, and the risk of
adverse regulatory actions. Any of these events may cause a Portfolio to be
unable to hedge its securities, and may cause a Portfolio to lose money on its
Currency Futures investments.
The Portfolios may also purchase options on Currency Futures. See
"Options Trading" below.
Options Trading. The Portfolios, except the Equity Income, Large
Company Growth and Small Company Growth Portfolios, may purchase or sell options
on individual securities or options on indices of securities. The purchaser of
an option risks a total loss of the premium paid for the option if the price of
the underlying security does not increase or decrease sufficiently to justify
the exercise of such option. The seller of an option, on the other hand, will
recognize the premium as income if the option expires unrecognized but foregoes
any capital appreciation in excess of the exercise price in the case of a call
option and may be required to pay a price in excess of current market value in
the case of a put option.
A call option for a particular security gives the purchaser of the
option the right to buy, and a writer the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to the
writer is in consideration for undertaking the obligation under the option
contract. A put option for a particular security gives the purchaser the right
to sell, and the writer the option to buy, the security at the stated exercise
price at any time prior to the expiration date of the option, regardless of the
market price of the security.
The Portfolios will write call options only if they are "covered." In
the case of a call option on a security or currency, the option is "covered" if
a Portfolio owns the instrument underlying the call or has an absolute and
immediate right to acquire that instrument without additional cash consideration
(or, if additional cash consideration is required, cash, U.S. Government
securities or other liquid high grade debt obligations, in such amount are held
in a segregated account by the Portfolio's custodian) upon conversion or
exchange of other securities held by it. For a call option on an index, the
option is covered if a Portfolio maintains with its custodian a diversified
portfolio of securities comprising the index or liquid assets equal to the
contract value. A call option is also covered if a Portfolio holds an offsetting
call on the same instrument or index as the call written. The Portfolios will
write put options only if they are "secured" by liquid assets maintained in a
segregated account by the Portfolios' custodian in an amount not less than the
exercise price of the option at all times during the option period.
Each Portfolio may buy put and call options and write covered call and
secured put options. Options trading is a highly specialized activity which
entails greater than ordinary investment risk. Options may be more volatile than
the underlying instruments, and therefore, on a percentage basis, an investment
in options may be subject to greater fluctuation than an investment in the
underlying instruments themselves. Purchasing options is a specialized
investment technique that entails a substantial risk of a complete loss of the
amounts paid as premiums to the writer of the option. If the Advisor is
incorrect in its forecast of market value or other factors when writing options,
the Portfolio would be in a worse position than it would have been had if it had
not written the option. If a Portfolio wishes to sell an underlying instrument
(in the case of a covered call option) or liquidate assets in a segregated
account (in the case of a secured put option), the Portfolio must purchase an
offsetting option if available, thereby incurring additional transactions costs.
Below is a description of some of the types of options in which a
Portfolio may invest.
A stock index option is an option contract whose value is based on the
value of a stock index at some future point in time. Stock indexes fluctuate
with changes in the market values of the stocks included in the index. The
effectiveness of purchasing or writing stock index options will depend upon the
extent to which price movements in a Portfolio's investment portfolio correlate
with price movements of the stock index selected. Accordingly, successful use by
a Portfolio of options on stock indexes will be subject to the Advisor's ability
to correctly analyze movements in the direction of the stock market generally or
of particular industry or market segments. When a Portfolio writes an option on
a stock index, the Portfolio will place in a segregated account with the
Portfolio's custodian cash or liquid securities in an amount at least equal to
the market value of the underlying stock index and will maintain the account
while the option is open or otherwise will cover the transaction.
The Portfolios may invest in stock index futures contracts and options
on stock index futures contracts. A stock index futures contract is an agreement
in which one party agrees to deliver to the other an amount of cash equal to a
specific dollar amount multiplied by the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made. Stock index futures contracts may be
purchased to protect a Portfolio against an increase in the prices of stocks
that a Portfolio intends to purchase. The purchase of options on stock index
futures contracts are similar to other options contracts as described above,
where a Portfolio pays a premium for the option to purchase or sell a stock
index futures contract for a specified price at a specified date. With options
on stock index futures contracts, a Portfolio risks the loss of the premium paid
for the option. The Portfolios may also invest in interest-rate futures
contracts and options on interest-rate futures contracts. These securities are
similar to stock index futures contracts and options on stock index futures
contracts, except they derive their price from an underlying interest rate
rather than a stock index.
Interest-rate and index swaps involve the exchange by a Portfolio with
another party of their respective commitments to pay or receive interest (for
example, an exchange of floating-rate payments for fixed-rate payments). Index
swaps involve the exchange by a Portfolio with another party of cash flows based
upon the performance of an index of securities. Interest-rate swaps involve the
exchange by a Portfolio with another party of cash flows based upon the
performance of a specified interest rate. In each case, the exchange commitments
can involve payments to be made in the same currency or in different currencies.
The Portfolios will usually enter into swaps on a net basis. In so doing, the
two payment streams are netted out, with a Portfolio receiving or paying, as the
case may be, only the net amount of the two payments. If a Portfolio enters into
a swap, it will maintain a segregated account on a gross basis, unless the
contract provides for a segregated account on a net basis. The risk of loss with
respect to swaps generally is limited to the net amount of payments that a
Portfolio is contractually obligated to make. There is also a risk of a default
by the other party to a swap, in which case a Portfolio may not receive net
amount of payments that the Portfolio contractually is entitled to receive.
Future Developments. The Portfolios may take advantage of opportunities
in the areas of options and futures contracts and options on futures contracts
and any other derivative investments which are not presently contemplated for
use by the Portfolios or which are not currently available but which may be
developed, to the extent such opportunities are both consistent with the
Portfolios' investment objective and legally permissible for a Portfolio. Before
entering into such transactions or making any such investment, a Portfolio would
provide appropriate disclosure in its Part A or this Part B.
Dollar Roll Transactions
A Portfolio may enter into "dollar roll" transactions wherein a
Portfolio sells fixed income securities, typically mortgage-backed securities,
and makes a commitment to purchase similar, but not identical, securities at a
later date from the same party. Like a forward commitment, during the roll
period no payment is made for the securities purchased and no interest or
principal payments on the security accrue to the purchaser, but a Portfolio
assumes the risk of ownership. A Portfolio is compensated for entering to dollar
roll transactions by the difference between the current sales price and the
forward price for the future purchase, as well as by the interest earned on the
cash proceeds of the initial sale. Like other when-issued securities or firm
commitment agreements, dollar roll transaction involve the risk that the market
value of the securities sold by a Portfolio may decline below the price at which
a Portfolio is committed to purchase similar securities. In the event the buyer
of securities under a dollar roll transaction becomes insolvent, the Portfolio's
use of the proceeds of the transaction may be restricted pending a determination
by the other party, or its trustee or receiver, whether to enforce the
Portfolio's obligation to repurchase the securities.
Emerging Market Securities
The Portfolios, except for the Index Portfolio, may invest in equity
securities of companies in "emerging markets." The Portfolios consider countries
with emerging markets to include the following: (i) countries with an emerging
stock market as defined by the International Finance Corporation; (ii) countries
with low- to middle-income economies according to the International Bank for
Reconstruction and Development (more commonly referred to as the World Bank);
and (iii) countries listed in World Bank publications as developing. The Advisor
may invest in those emerging markets that have a relatively low gross national
product per capita, compared to the world's major economies, and which exhibit
potential for rapid economic growth. The Advisor believes that investment in
equity securities of emerging market issuers offers significant potential for
long-term capital appreciation.
Equity securities of emerging market issuers may include common stock,
preferred stocks (including convertible preferred stocks) and warrants; bonds,
notes and debentures convertible into common or preferred stock; equity
interests in foreign investment funds or trusts and real estate investment trust
securities. The Portfolios may invest in American Depositary Receipts ("ADRs"),
Canadian Depositary Receipts ("CDRs"), European Depositary Receipts ("EDRs"),
Global Depositary Receipts ("GDRs") and International Depositary Receipts
("IDRs") of such issuers.
Emerging market countries include, but are not limited to: Argentina,
Brazil, Chile, China, the Czech Republic, Columbia, Ecuador, Greece, Hong Kong,
Indonesia, India, Malaysia, Mexico, the Philippines, Poland, Portugal, Peru,
Russia, Singapore, South Africa, Thailand, Taiwan and Turkey. A company is
considered in a country, market or region if it conducts its principal business
activities there, namely, if it derives a significant portion (at least 50%) of
its revenues or profits from goods produced or sold, investments made, or
services performed therein or has at least 50% of its assets situated in such
country, market or region.
There are special risks involved in investing in emerging-market
countries. Many investments in emerging markets can be considered speculative,
and their prices can be much more volatile than in the more developed nations of
the world. This difference reflects the greater uncertainties of investing in
less established markets and economies. The financial markets of emerging
markets countries are generally less well capitalized and thus securities of
issuers based in such countries may be less liquid. Most are heavily dependent
on international trade, and some are especially vulnerable to recessions in
other countries. Many of these countries are also sensitive to world commodity
prices. Some countries may still have obsolete financial systems, economic
problems or archaic legal systems. The currencies of certain emerging market
countries, and therefore the value of securities denominated in such currencies,
may be more volatile than currencies of developed countries. In addition, many
of these nations are experiencing political and social uncertainties.
Floating- and Variable-Rate Obligations
The Portfolios may purchase floating- and variable-rate obligations
such as demand notes and bonds. Variable-rate demand notes include master demand
notes that are obligations that permit a Portfolio to invest fluctuating
amounts, which may change daily without penalty, pursuant to direct arrangements
between the Portfolio, as lender, and the borrower. The interest rate on a
floating-rate demand obligation is based on a known lending rate, such as a
bank's prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable-rate demand obligation is adjusted
automatically at specified intervals. The issuer of such obligations ordinarily
has a right, after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a specified
number of days notice to the holders of such obligations. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks.
There generally is no established secondary market for these
obligations because they are direct lending arrangements between the lender and
borrower. Accordingly, where these obligations are not secured by letters of
credit or other credit support arrangements, a Portfolio's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating agencies and
each Portfolio may invest in obligations which are not so rated only if the
Advisor determines that at the time of investment the obligations are of
comparable quality to the other obligations in which such Portfolio may invest.
The Advisor, on behalf of each Portfolio, considers on an ongoing basis the
creditworthiness of the issuers of the floating- and variable-rate demand
obligations in such Portfolio's investment portfolio. Floating- and
variable-rate instruments are subject to interest-rate risk and credit risk.
The floating- and variable-rate instruments that the Portfolios may
purchase include certificates of participation in such instruments.
Foreign Obligations and Securities
The Portfolios may invest in foreign securities through ADRs, CDRs,
EDRs, IDRs and GDRs or other similar securities convertible into securities of
foreign issuers. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs (sponsored or
unsponsored) are receipts typically issued by a U.S. bank or trust company and
traded on a U.S. stock exchange, and CDRs are receipts typically issued by a
Canadian bank or trust company that evidence ownership of underlying foreign
securities. Issuers of unsponsored ADRs are not contractually obligated to
disclose material information in the U.S. and, therefore, such information may
not correlate to the market value of the unsponsored ADR. EDRs and IDRs are
receipts typically issued by European banks and trust companies, and GDRs are
receipts issued by either a U.S. or non-U.S. banking institution, that evidence
ownership of the underlying foreign securities. Generally, ADRs in registered
form are designed for use in U.S. securities markets and EDRs and IDRs in bearer
form are designed primarily for use in Europe.
The Portfolios may invest in fixed income securities of non-U.S.
governmental and private issuers. Such investments may include bonds, notes,
debentures and other similar debt securities, including convertible securities.
Investments in foreign obligations involve certain considerations that
are not typically associated with investing in domestic securities. There may be
less publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not generally subject to the same accounting,
auditing and financial reporting standards or governmental supervision as
domestic issuers. In addition, with respect to certain foreign countries, taxes
may be withheld at the source under foreign tax laws, and there is a possibility
of expropriation or confiscatory taxation, political, social and monetary
instability or diplomatic developments that could adversely affect investments
in, the liquidity of, and the ability to enforce contractual obligations with
respect to, securities of issuers located in those countries.
Investment income on certain foreign securities in which a Portfolio
may invest may be subject to foreign withholding or other taxes that could
reduce the return on these securities. Tax treaties between the United States
and foreign countries, however, may reduce or eliminate the amount of foreign
taxes to which the Portfolio would be subject.
Forward Commitments, When-Issued Purchases and Delayed-Delivery
Transactions
Each Portfolio may purchase or sell securities on a when-issued or
delayed-delivery basis and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. Securities
purchased or sold on a when-issued, delayed-delivery or forward commitment basis
involve a risk of loss if the value of the security to be purchased declines, or
the value of the security to be sold increases, before the settlement date.
Each Portfolio will segregate cash, U.S. Government obligations or
other high-quality debt instruments in an amount at least equal in value to the
Portfolio's commitments to purchase when-issued securities. If the value of
these assets declines, the Portfolio will segregate additional liquid assets on
a daily basis so that the value of the segregated assets is equal to the amount
of such commitments.
Guaranteed Investment Contracts
The Portfolios may invest in guaranteed investment contracts ("GICs")
issued by insurance companies. Pursuant to such contracts, a Portfolio makes
cash contributions to a deposit fund of the insurance company's general account.
The insurance company then credits to the deposit fund on a monthly basis
guaranteed interest at a rate based on an index. The GICs provide that this
guaranteed interest will not be less than a certain minimum rate. The insurance
company may assess periodic charges against a GIC for expense and service costs
allocable to it, and these charges will be deducted from the value of the
deposit fund. A Portfolio will purchase a GIC only when the Advisor has
determined that the GIC presents minimal credit risks to the Portfolio and is of
comparable quality to instruments in which the Portfolio may otherwise invest.
Because a Portfolio may not receive the principal amount of a GIC from the
insurance company on seven days' notice or less, a GIC may be considered an
illiquid investment. The term of a GIC will be one year or less.
Illiquid Securities
The Portfolios may invest in securities not registered under the
Securities Act of 1933, as amended ("1933 Act") and other securities subject to
legal or other restrictions on resale. Illiquid securities may be difficult to
sell promptly at an acceptable price. Delay or difficulty in selling securities
may result in a loss or be costly to a Portfolio.
Interest Rate Protection Transactions
To manage its exposure to different types of investments, the
Portfolios may enter into interest rate, currency and mortgage (or other asset)
swap agreements and may purchase and sell interest rate "caps," "floors" and
"collars." In a typical interest rate swap agreement, one party agrees to make
regular payments equal to a floating interest rate on a specific amount in
return for payments equal to a fixed interest rate on the same amount for a
specified period. In a cap or floor, one party agrees, usually in return for a
fee, to make payments under particular circumstances. A collar entitles the
purchaser to receive payments to the extent a specified interest rate falls
outside an agreed upon range.
A Portfolio expects to enter into interest rate protection transactions
to preserve a return or spread on a particular investment or portion of its
portfolio or to protect against any increase in the price of securities it
anticipates purchasing at a later date. The Portfolios intend to use these
transactions as a hedge and not as a speculative investment.
Letters of Credit.
Certain of the debt obligations (including certificates of
participation, commercial paper and other short-term obligations) which the
Portfolios may purchase may be backed by an unconditional and irrevocable letter
of credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Only banks, savings and loan associations and insurance
companies which, in the opinion of the Advisor, are of comparable quality to
issuers of other permitted investments of the Portfolio may be used for letter
of credit-backed investments.
Loans of Portfolio Securities
Each Portfolio may lend its portfolio securities pursuant to guidelines
approved by the Board of Trustees of the Trust to brokers, dealers and financial
institutions, provided: (1) the loan is secured continuously by collateral
consisting of cash, securities of the U.S. Government, its agencies or
instrumentalities, or an irrevocable letter of credit issued by a bank organized
under the laws of the United States, organized under the laws of a State, or a
foreign bank that has filed an agreement with the Federal Reserve Board to
comply with the same rules and regulations applicable to U.S. banks in
securities credit transactions, and such collateral being maintained on a daily
marked-to-market basis in an amount at least equal to the current market value
of the securities loaned plus any accrued interest or dividends; (2) the
Portfolio may at any time call the loan and obtain the return of the securities
loaned upon sufficient prior notification; (3) the Portfolio will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities loaned will not at any time exceed the limits
established by the 1940 Act.
A Portfolio will earn income for lending its securities because cash
collateral pursuant to these loans will be invested subject to the investment
objectives, principal investment strategies and policies of the Portfolio. In
connection with lending securities, a Portfolio may pay reasonable finders,
administrative and custodial fees. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to provide additional
collateral. In either case, a Portfolio could experience delays in recovering
securities or collateral or could lose all or part of the value of the loaned
securities. Although voting rights, or rights to consent, attendant to
securities on loan pass to the borrower, such loans may be called at any time
and will be called so that the securities may be voted by a Portfolio if a
material event affecting the investment is to occur. A Portfolio may pay a
portion of the interest or fees earned from securities lending to a borrower or
securities lending agent. Borrowing and placing brokers may not be affiliated,
directly or indirectly, with the Trust, the Advisor or the Distributor.
Money Market Instruments and Temporary Investments
The Portfolios may invest in the following types of high quality money
market instruments that have remaining maturities not exceeding one year: (i)
U.S. Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
FDIC; (iii) commercial paper rated at the date of purchase "Prime-1" by Moodys
or "A-1" or "A-1--" by S&P, or, if unrated, of comparable quality as determined
by the Advisor; and (iv) repurchase agreements. The Portfolios also may invest
in short-term U.S. dollar-denominated obligations of foreign banks (including
U.S. branches) that at the time of investment: (i) have more than $10 billion,
or the equivalent in other currencies, in total assets; (ii) are among the 75
largest foreign banks in the world as determined on the basis of assets; (iii)
have branches or agencies in the United States; and (iv) in the opinion of the
Advisor, are of comparable quality to obligations of U.S. banks which may be
purchased by the Portfolios.
Repurchase Agreements. A Portfolio may enter into repurchase
agreements, wherein the seller of a security to the Portfolio agrees to
repurchase that security from the Portfolio at a mutually agreed upon time and
price. A Portfolio may enter into repurchase agreements only with respect to
securities that could otherwise be purchased by the Portfolio. All repurchase
agreements will be fully collateralized at 102% based on values that are marked
to market daily. The maturities of the underlying securities in a repurchase
agreement transaction may be greater than twelve months, although the maximum
term of a repurchase agreement will always be less than twelve months. If the
seller defaults and the value of the underlying securities has declined, a
Portfolio may incur a loss. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security, the Portfolio's disposition of the
security may be delayed or limited.
The Portfolios may not enter into a repurchase agreement with a
maturity of more than seven days, if, as a result, more than 15% of a
Portfolio's total net assets would be invested in repurchase agreements with
maturities of more than seven days and illiquid securities. A Portfolio will
only enter into repurchase agreements with primary broker/dealers and commercial
banks that meet guidelines established by the Board of Trustees and that are not
affiliated with the investment Advisor. The Portfolios may participate in pooled
repurchase agreement transactions with other funds advised by the Advisor.
Mortgage-Related and Other Asset-Backed Securities
The Portfolios, except the Index and International Equity Portfolios,
may invest in mortgage-related securities. Mortgage pass-through securities are
securities representing interests in "pools" of mortgages in which payments of
both interest and principal on the securities are made monthly, in effect
"passing through" monthly payments made by the individual borrowers on the
residential mortgage loans which underlie the securities (net of fees paid to
the issuer or guarantor of the securities). Early repayment of principal on
mortgage pass-through securities may expose a Portfolio to a lower rate of
return upon reinvestment of principal. Also, if a security subject to prepayment
has been purchased at a premium, in the event of prepayment the value of the
premium would be lost. Like other fixed-income securities, when interest rates
rise, the value of a mortgage-related security generally will decline; however,
when interest rates decline, the value of mortgage-related securities with
prepayment features may not increase as much as other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities (but
not the market value of the securities themselves) may be guaranteed by the full
faith and credit of the U.S. Government or its agencies or instrumentalities.
Mortgage pass-through securities created by non-government issuers (such as
commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers) may be supported
by various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance, and letters of credit, which may be issued by
governmental entities, private insurers or the mortgage poolers.
The Portfolios may also invest in investment grade Collateralized
Mortgage Obligations ("CMOs"). CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by the Government National Mortgage
Association ("GNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") or
the Federal National Mortgage Association (" FNMA"). CMOs are structured into
multiple classes, with each class bearing a different stated maturity. Payments
of principal, including prepayments, are first returned to investors holding the
shortest maturity class; investors holding the longer maturity classes receive
principal only after the first class has been retired. As new types of
mortgage-related securities are developed and offered to investors, the Advisor
will, consistent with a Portfolio's investment objective, policies and quality
standards, consider making investments in such new types of mortgage-related
securities.
The Portfolios may also invest in ARMs issued or guaranteed by the
GNMA, FNMA or the FHLMC. The full and timely payment of principal and interest
on GNMA ARMs is guaranteed by GNMA and backed by the full faith and credit of
the U.S. Government. FNMA also guarantees full and timely payment of both
interest and principal, while FHLMC guarantees full and timely payment of
interest and ultimate payment of principal. FNMA and FHLMC ARMs are not backed
by the full faith and credit of the United States. However, because FNMA and
FHLMC are government-sponsored enterprises, these securities are generally
considered to be high quality investments that present minimal credit risks. The
yields provided by these ARMs have historically exceeded the yields on other
types of U.S. Government securities with comparable maturities, although there
can be no assurance that this historical performance will continue.
The mortgages underlying ARMs guaranteed by GNMA are typically insured
or guaranteed by the Federal Housing Administration, the Veterans Administration
or the Farmers Home Administration, while those underlying ARMs issued by FNMA
or FHLMC are typically conventional residential mortgages which are not so
insured or guaranteed, but which conform to specific underwriting, size and
maturity standards.
The interest rates on the mortgages underlying the ARMs and some of the
CMOs in which the Portfolio may invest generally are readjusted at periodic
intervals ranging from one year or less to several years in response to changes
in a predetermined commonly-recognized interest rate index. The adjustable rate
feature should reduce, but will not eliminate, price fluctuations in such
securities, particularly when market interest rates fluctuate. The net asset
value of a Portfolio's shares may fluctuate to the extent interest rates on
underlying mortgages differ from prevailing market interest rates during interim
periods between interest rate reset dates. Accordingly, investors could
experience some loss if they redeem their shares of the Portfolio or if the
Portfolio sells these securities before the interest rates on the underlying
mortgages are adjusted to reflect prevailing market interest rates. The holder
of ARMs and CMOs are also subject to repayment risk.
There are risks inherent in the purchase of mortgage-related
securities. For example, these securities are subject to a risk that default in
payment will occur on the underlying mortgages. In addition to default risk,
these securities are subject to the risk that prepayment on the underlying
mortgages will occur earlier or later or at a lessor or greater rate than
expected. To the extent that the Advisor's assumptions about prepayments are
inaccurate, these securities may expose the Portfolios to significantly greater
market risks than expected.
The Portfolios also may invest in the following types of FHLMC mortgage
pass-through securities. FHLMC issues two types of mortgage pass-through
securities: mortgage participation certificates ("PCs") and guaranteed mortgage
certificates ("GMCs"). PCs resemble GNMA certificates in that each PC represents
a pro rata share of all interest and principal payments made and owed on the
underlying pool of mortgages. GMCs also represent a pro rata interest in a pool
of mortgages. These instruments, however, pay interest semiannually and return
principal once a year in guaranteed minimum payments. These mortgage
pass-through securities differ from bonds in that principal is paid back by the
borrower over the length of the loan rather than returned in a lump sum at
maturity. They are called "pass-through" securities because both interest and
principal payments, including prepayments, are passed through to the holder of
the security. PCs and GMCs are both subject to prepayment risk.
Municipal Bonds
The Portfolios may invest in municipal bonds. The two principal
classifications of municipal bonds are "general obligation" and "revenue" bonds.
Municipal bonds are debt obligations issued to obtain funds for various public
purposes. Industrial development bonds are a specific type of revenue bond
backed by the credit and security of a private user. Certain types of industrial
development bonds are issued by or on behalf of public authorities to obtain
funds to provide privately-operated facilities.
From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
interest on municipal obligations. For example, under federal tax legislation
enacted in 1986, interest on certain private activity bonds must be included in
an investor's alternative minimum taxable income, and corporate investors must
treat all tax-exempt interest as an item of tax preference. Moreover a Portfolio
cannot predict what legislation, if any, may be proposed in the state
legislature regarding the state income tax status of interest on such
obligations, or which proposals, if any, might be enacted. Such proposals, while
pending or if enacted, might materially and adversely affect the availability of
municipal obligations generally for investment by the Portfolio and the
liquidity and value of the Portfolio's assets. In such an event, a Portfolio
would re-evaluate its investment objective and policies and consider possible
changes in its structure or possible dissolution.
Certain of the municipal obligations held by a Portfolio may be insured
as to the timely payment of principal and interest. The insurance policies
usually are obtained by the issuer of the municipal obligation at the time of
its original issuance. In the event that the issuer defaults on interest or
principal payment, the insurer will be notified and will be required to make
payment to the bondholders. There is, however, no guarantee that the insurer
will meet its obligations. In addition, such insurance does not protect against
market fluctuations caused by changes in interest rates and other factors.
Other Investment Companies
The Portfolios may invest in shares of other investment companies to
the extent permitted under the 1940 Act. However, no Portfolio that has
knowledge that its Interests are purchased by another investment company
investor pursuant to Section 12(d)(1)(G) of the 1940 Act may acquire any
securities of registered open-end management investment companies or registered
unit investment trusts in reliance on Section 12(d)(1)(F) or 12(d(1)(G) of the
1940 Act. In addition, any Portfolio that has knowledge that its Interests are
purchased by another investment company pursuant to an exemptive order relating
to Section 12(d)(1) of the 1940 Act that precludes underlying portfolios from
acquiring any securities of any other investment company in excess of the limits
contained in Section 12(d)(1)(A) of the 1940 Act, except for securities received
as a dividend or as a result of a plan of reorganization of any company, will
limit its acquisition of securities of other investment companies accordingly.
Participation Interests
The Portfolios may purchase participation interests in loans or
instruments in which the Portfolio may invest directly that are owned by banks
or other institutions. A participation interest gives a Portfolio an undivided
proportionate interest in a loan or instrument. Participation interests may
carry a demand feature permitting the holder to tender the interests back to the
bank or other institution. Participation interests, however, do not provide the
Portfolio with any right to enforce compliance by the borrower, nor any rights
of set-off against the borrower and the Portfolio may not directly benefit from
any collateral supporting the loan in which it purchased a participation
interest. As a result, the Portfolio will assume the credit risk of both the
borrower and the lender that is selling the participation interest.
Privately Issued Securities
The Portfolios, except the Disciplined Growth, Small Cap Value and
Small Company Growth Portfolios, may invest in privately issued securities,
including those which may be resold only in accordance with Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). Rule 144A Securities are
restricted securities that are not publicly traded. Accordingly, the liquidity
of the market for specific Rule 144A Securities may vary. Delay or difficulty in
selling such securities may result in a loss to a Portfolio. Privately issued or
Rule 144A securities that are determined by the investment Advisor to be
"illiquid" are subject to the Portfolios' policy of not investing more than 15%
of its net assets in illiquid securities. The investment Advisor, under
guidelines approved by Board of Trustees of the Trust, will evaluate the
liquidity characteristics of each Rule 144A Security proposed for purchase by a
Portfolio on a case-by-case basis and will consider the following factors, among
others, in their evaluation: (1) the frequency of trades and quotes for the Rule
144A Security; (2) the number of dealers willing to purchase or sell the Rule
144A Security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the Rule 144A Security; and (4) the nature of
the Rule 144A Security and the nature of the marketplace trades (e.g., the time
needed to dispose of the Rule 144A Security, the method of soliciting offers and
the mechanics of transfer).
Reverse Repurchase Agreements
The Portfolios may enter into reverse repurchase agreements (an
agreement under which a Portfolio sells their portfolio securities and agrees to
repurchase them at an agreed-upon date and price). At the time a Portfolio
enters into a reverse repurchase agreement it will place in a segregated
custodial account liquid assets such as U.S. Government securities or other
liquid high-grade debt securities having a value equal to or greater than the
repurchase price (including accrued interest) and will subsequently monitor the
account to ensure that such value is maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Portfolios
may decline below the price at which the Portfolios are obligated to repurchase
the securities. Reverse repurchase agreements may be viewed as a form of
borrowing.
Small Company Securities
Investments in small capitalization companies carry greater risk than
investments in larger capitalization companies. Smaller capitalization companies
generally experience higher growth rates and higher failure rates than do larger
capitalization companies; and the trading volume of smaller capitalization
companies' securities is normally lower than that of larger capitalization
companies and, consequently, generally has a disproportionate effect on market
price (tending to make prices rise more in response to buying demand and fall
more in response to selling pressure).
Securities owned by a Portfolio that are traded in the over-the-counter
market or on a regional securities exchange may not be traded every day or in
the volume typical of securities trading on a national securities exchange. As a
result, disposition by a Portfolio of a security, to meet redemption requests by
other investors or otherwise, may require the Portfolio to sell these securities
at a discount from market prices, to sell during periods when disposition is not
desirable, or to make many small sales over a lengthy period of time.
Investment in small, unseasoned issuers generally carry greater risk
than is customarily associated with larger, more seasoned companies. Such
issuers often have products and management personnel that have not been tested
by time or the marketplace and their financial resources may not be as
substantial as those of more established companies. Their securities (which a
Portfolio may purchase when they are offered to the public for the first time)
may have a limited trading market that can adversely affect their sale by the
Portfolio and can result in such securities being priced lower than otherwise
might be the case. If other institutional investors engaged in trading this type
of security, a Fund may be forced to dispose of its holdings at prices lower
than might otherwise be obtained.
Stripped Securities
The Portfolios may purchase Treasury receipts, securities of
government-sponsored enterprises (GSEs), and other "stripped" securities that
evidence ownership in either the future interest payments or the future
principal payments on U.S. Government and other obligations. The stripped
securities the Portfolios may purchase are issued by the U.S. Government (or a
U.S. Government agency or instrumentality) or by private issuers such as banks,
corporations and other institutions at a discount to their face value. The
Portfolios will not purchase stripped mortgage-backed securities ("SMBS"). The
stripped securities purchased by the Portfolios generally are structured to make
a lump-sum payment at maturity and do not make periodic payments of principal or
interest. Hence, the duration of these securities tends to be longer and they
are therefore more sensitive to interest rate fluctuations than similar
securities that offer periodic payments over time. The stripped securities
purchased by the Portfolios are not subject to prepayment or extension risk.
The Portfolios may purchase participations in trusts that hold U.S.
Treasury securities (such as TIGRs and CATS) or other obligations where the
trust participations evidence ownership in either the future interest payments
or the future principal payments on the obligations. These participations are
normally issued at a discount to their "face value," and can exhibit greater
price volatility than ordinary debt securities because of the way in which their
principal and interest are returned to investors.
Unrated Investments
The Portfolios may purchase instruments that are not rated if, in the
opinion of the Advisor, such obligations are of investment quality comparable to
other rated investments that are permitted to be purchased by such Portfolio.
After purchase by a Portfolio, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Portfolio. Neither
event will require a sale of such security by the Portfolio. To the extent the
ratings given by Moodys or S&P may change as a result of changes in such
organizations or their rating systems, a Portfolio will attempt to use
comparable ratings as standards for investments in accordance with the
investment policies contained in its Part A and in this Part B. The ratings of
Moodys and S&P are more fully described in the Appendix to this Part B.
U.S. Government Obligations
The Portfolios may invest in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities ("U.S. Government
obligations"). Payment of principal and interest on U.S. Government obligations
(i) may be backed by the full faith and credit of the United States (as with
U.S. Treasury bills and GNMA certificates) or (ii) may be backed solely by the
issuing or guaranteeing agency or instrumentality itself (as with FNMA notes).
In the latter case investors must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
which agency or instrumentality may be privately owned. There can be no
assurance that the U.S. Government will provide financial support to its
agencies or instrumentalities where it is not obligated to do so. In addition,
U.S. Government obligations are subject to fluctuations in market value due to
fluctuations in market interest rates. As a general matter, the value of debt
instruments, including U.S. Government obligations, declines when market
interest rates increase and rises when market interest rates decrease. Certain
types of U.S. Government obligations are subject to fluctuations in yield or
value due to their structure or contract terms.
Warrants
The Portfolios may invest in warrants. Warrants represent rights to
purchase securities at a specific price valid for a specific period of time. The
prices of warrants do not necessarily correlate with the prices of the
underlying securities. A Portfolio may only purchase warrants on securities in
which the Fund may invest directly.
Zero Coupon Bonds
The Portfolios may invest in zero coupon bonds. Zero coupon bonds are
securities that make no periodic interest payments, but are instead sold at
discounts from face value. The buyer of such a bond receives the rate of return
by the gradual appreciation of the security, which is redeemed at face value on
a specified maturity date. Because zero coupon bonds bear no interest, they are
more sensitive to interest-rate changes and are therefore more volatile. When
interest rates rise, the discount to face value of the security deepens and the
securities decrease more rapidly in value, when interest rates fall, zero coupon
securities rise more rapidly in value because the bonds carry fixed interest
rates that become more attractive in a falling interest rate environment.
Nationally Recognized Statistical Ratings Organization
The ratings of Moodys Investors Service, Inc.; Standard & Poor's
Ratings Group, Division of McGraw Hill; Duff & Phelps Credit Rating Co.; Fitch
Investors Service, Inc.; Thomson Bank Watch; and IBCA Inc. represent their
opinions as to the quality of debt securities. It should be emphasized, however,
that ratings are general and not absolute standards of quality, and debt
securities with the same maturity, interest rate and rating may have different
yields while debt securities of the same maturity and interest rate with
different ratings may have the same yield. Subsequent to purchase by a
Portfolio, an issue of debt securities may cease to be rated or its rating may
be reduced below the minimum rating required for purchase by a Portfolio. The
Advisor will consider such an event in determining whether the Portfolio
involved should continue to hold the obligation.
Portfolio Turnover
Generally, the Portfolios will purchase portfolio securities for
capital appreciation or investment income, or both, and not for short-term
trading profits. If a Portfolio's annual portfolio turnover rate exceeds 100%,
it may result in higher brokerage costs and possible tax consequences for the
Interest holders.
ITEM 13. MANAGEMENT OF THE TRUST
The principal occupations during the past five years of the Trustees
and principal executive Officers of the Trust are listed below. The address of
each, unless otherwise indicated, is 525 Market Street, 12th Floor, San
Francisco, CA 94105. Trustees deemed to be "interested persons" of the Trust for
purposes of the 1940 Act are indicated by an asterisk.
<PAGE>
<TABLE>
<S> <C> <C>
Principal Occupations
Name, Age and Address Position During Past 5 Years
*Robert C. Brown, 65 Trustee Director, Federal Farm Credit Banks Funding 5038
Kestral Parkway South Corporation and Farm Credit System Financial Sarasota, FL
34231 Assistance Corporation since February 1993.
Donald H. Burkhardt, 70 Trustee Principal, Burkhardt Law Firm.
777 South Steele Street
Denver, CO 80209
Jack S. Euphrat, 77 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027
Thomas S. Goho, 56 Trustee Business Associate Professor, Wake Forest
321 Beechcliff Court University, Calloway School of Business and
Winston-Salem, NC 27104 Accountancy since 1994.
Peter G. Gordon, 56 Trustee Chairman and Co-Founder of Crystal Geyser Water
Crystal Geyser Water Co. Company and President of Crystal Geyser Roxane
55 Francisco Street, Suite 410 Water Company since 1977.
San Francisco, CA 94133
*W. Rodney Hughes, 72 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
*Richard M. Leach, 63 Trustee President of Richard M. Leach Associates (a
P.O. Box 1888 financial consulting firm) since 1992.
New London, NH 03257
*J. Tucker Morse, 54 Trustee Private Investor/Real Estate Developer; Chairman
10 Legare Street of Vault Holdings, LLC.
Charleston, SC 29401
Timothy J. Penny, 45 Trustee Senior Counselor to the public relations firm of
500 North State Street Himle-Horner since January 1995 and Senior Fellow
Waseca, MN 56093 at the Humphrey Institute, Minneapolis, Minnesota
(a public policy organization) since January 1995.
Donald C. Willeke, 59 Trustee Principal, law firm of Willeke & Daniels.
201 Ridgewood Avenue
Minneapolis, MN 55403
Michael J. Hogan, 41 President Executive Vice President of Wells Fargo Bank, N.A.
since July 1999. Senior Vice President of Wells
Fargo Bank, N.A. from April 1997 to May 1999.
Vice President of American Express Financial
Advisors from May 1996 to April 1997, and Director
of American Express Financial Advisors from March
1993 to May 1996.
Karla M. Rabusch, 41 Treasurer Senior Vice President of Wells Fargo Bank, N.A.,
since May 2000. Vice President of Wells Fargo
Bank, N.A. from December 1997 to May 2000. Prior
thereto, Director of Managed Assets Investment
Accounting of American Express Financial Advisors
from May 1994 to November 1997.
C. David Messman, 40 Secretary Vice President and Senior Counsel of Wells Fargo
Bank, N.A. since January 1996. Prior thereto,
Branch Chief, Division of Investment Management,
U.S. Securities and Exchange Commission.
</TABLE>
Each of the Trustees and Officers listed above act in the identical
capacities for Wells Fargo Variable Trust and Wells Fargo Funds Trust (including
the Trust, collectively the "Fund Complex"). All of the non-interested Trustees
are also members of the Audit and Nominating Committees of the Trust, and of
each other trust in the Fund Complex.
Each Trustee receives an annual retainer (payable quarterly) of $40,000
from the Fund Complex, and also receives a combined fee of $1,000 for attendance
at Fund Complex Board meetings, and a combined fee of $250 for attendance at
committee meetings. If a committee meeting is held absent a full Board meeting,
each attending Trustee will receive a $1,000 combined fee. These fees apply
equally for in-person or telephonic meetings, and Trustees are reimbursed for
all out-of-pocket expenses related to attending meetings. The Trustees do not
receive any retirement benefits or deferred compensation from the Trust or any
other member of the Fund Complex. The Trust's officers are not compensated by
the Trust for their services. For the fiscal year ended May 31, 2000, the
Trustees received the following compensation:
Compensation Table
Year Ended May 31, 2000
Trustee Compensation
Robert C. Brown $23,102
Donald H. Burkhardt $22,384
Jack S. Euphrat $27,254
Thomas S. Goho $27,254
Peter G. Gordon $27,254
W. Rodney Hughes $26,754
Richard M. Leach $22,102
J. Tucker Morse $26,754
Timothy J. Penny $23,602
Donald C. Willeke $23,602
As of the date of this Part B, Trustees and Officers of the Trust as a
group beneficially owned less than 1% of the outstanding shares of the Trust.
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Set forth below, as of August 31, 2000, is the name and share ownership
of each person known by the Trust to have beneficial or record ownership of 5%
or more of a class of a Portfolio or 5% or more of the voting securities as a
whole. The address for each of the funds listed below is 525 Market Street, San
Francisco, CA 94163.
<TABLE>
<S> <C> <C>
5% Ownership as of AUGUST 31, 2000
Percentage
Portfolio Name and Address of Portfolio
Disciplined Growth Disciplined Growth 16.77%
Portfolio Diversified Equity 56.88%
Strategic Income 1.33%
Moderate Balanced 15.00%
Growth Balanced 18.07%
Aggressive Balanced-Equity 1.79%
Equity Income Portfolio Equity Income 66.16%
Diversified Equity 22.69%
Strategic Income 0.53%
Moderate Balanced 2.08%
Growth Balanced 7.25%
Aggressive Balanced-Equity 0.72%
WealthBuilder Growth 0.25%
WealthBuilder Growth & Income 0.17%
WealthBuilding Growth Balanced 0.13%
Index Portfolio Index 54.73%
Diversified Equity 30.39%
Strategic Income 0.71%
Moderate Balanced 2.78%
Growth Balanced 9.68%
Aggressive Balanced-Equity 0.97%
Forum Equity Index 0.75%
International Portfolio International 42.53%
Growth Equity 18.78%
Diversified Equity 26.29%
Strategic Income 0.62%
Moderate Balanced 2.43%
Growth Balanced 8.49%
Aggressive Balanced-Equity 0.85%
Large Company Growth Large Company Growth 71.51%
Portfolio Growth Equity 7.90%
Diversified Equity 13.47%
Strategic Income 0.32%
Moderate Balanced 1.23%
Growth Balanced 4.30%
Aggressive Balanced-Equity 0.43%
WealthBuilder Growth 0.63%
WealthBuilder Growth & Income 0.13%
WealthBuilder Growth Balanced 0.09%
Managed Fixed Income Diversified Bond 20.01%
Portfolio Strategic Income 14.91%
Moderate Balanced 23.70%
Growth Balanced 39.55%
Aggressive Balanced-Equity 1.83%
Positive Return Bond Diversified Bond 20.02%
Portfolio Strategic Income 14.89%
Moderate Balanced 23.70%
Growth Balanced 39.55%
Aggressive Balanced-Equity 1.83%
Small Cap Value Small Cap Value 10.27%
Portfolio Growth Equity 35.86%
Diversified Equity 27.43%
Strategic Income 0.64%
Moderate Balanced 2.50%
Growth Balanced 8.73%
Aggressive Balanced-Equity 0.87%
Diversified Small Cap 13.69%
Stable Income Portfolio Strategic Income 19.79%
Moderate Balanced 23.14%
Stable Income 57.07%
Strategic Value Bond Diversified Bond 20.01%
Portfolio Strategic Income 14.90%
Moderate Balanced 23.68%
Growth Balanced 39.59%
Aggressive Balanced-Equity 1.83%
Small Company Growth Small Company Growth 78.19%
Portfolio Growth Equity 8.58%
Diversified Equity 6.75%
Strategic Income 0.16%
Moderate Balanced 0.61%
Growth Balanced 2.15%
Aggressive Balanced-Equity 0.21%
Diversified Small Cap 3.35%
Small Company Index Growth Equity 39.84%
Portfolio Diversified Equity 30.69%
Strategic Income 0.72%
Moderate Balanced 2.78%
Growth Balanced 9.75%
Aggressive Balanced-Equity 0.96%
Diversified Small Cap 15.26%
Small Company Value Growth Equity 40.31%
Diversified Equity 30.43%
Strategic Income 0.72%
Moderate Balanced 2.77%
Growth Balanced 9.69%
Aggressive Balanced-Equity 0.96%
Diversified Small Cap 15.12%
International Equity Growth Equity 32.23%
Portfolio Diversified Equity 44.69%
Strategic Income 1.05%
Moderate Balanced 4.10%
Growth Balanced 14.29%
Aggressive Balanced-Equity 1.43%
WealthBuilder Growth 0.69%
WealthBuilder Growth & Income 0.88%
WealthBuilder Growth Balanced 0.64%
</TABLE>
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
Investment Advisor. Subject to the general supervision of the Board,
Wells Fargo provides investment advisory services to the Portfolios. As
investment advisor, Wells Fargo furnishes investment guidance and policy
direction in connection with the daily portfolio management of the Portfolios.
Wells Fargo furnishes to the Trust's Board of Trustees periodic reports on the
investment strategies and performance of each Portfolio. Wells Fargo provides
the Portfolios with, among other things, money market and fixed-income research,
analysis and statistical and economic data and information concerning interest
rate and securities markets trends, portfolio composition, and credit
conditions.
The investment advisory agreement for each Portfolio ("Advisory
Agreement") will remain in effect for a period of two years from the date of its
effectiveness and thereafter shall continue for successive one-year periods
provided such continuance is specifically approved at least annually by the
Board or by vote of the Interest holders of the Portfolio, and, in either case,
by a majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party (other than as trustees of the Trust).
The Advisory Agreement with respect to a Portfolio is terminable
without the payment of penalty, (i) by the Board or by a vote of a majority of
the Portfolio's outstanding voting securities (as defined in the 1940 Act) on 60
days' written notice by either party and will terminate automatically upon its
assignment.
The advisory fees, as described in Part A, are accrued daily and paid
monthly. The adviser in its sole discretion, may waive all or any portion of its
advisory fee with respect to each Portfolio. Each Advisory Agreement provides
that the Advisers may render service to others.
The table below shows the dollar amount of advisory fees payable as a
percentage of daily net assets by each Portfolio to the predecessor advisors
over the past three years. As discussed in the "Trust History" section, the
Portfolios were created as part of the reorganization of the Stagecoach and
Norwest Funds. Therefore, the information shown below concerning the dollar
amounts of advisory fees paid shows the dollar amount of fees paid to advisors
by the predecessor portfolio that is considered the surviving entity for
accounting purposes. Specifically, the table details the dollar amount of fees
that would have been payable had certain waivers not been in place, together
with the dollar amount of fees waived and the dollar amount of net fees paid.
The advisory fee rates are set forth in Part A. This information is provided for
the past three years or such shorter terms as a Portfolio has been operational.
<TABLE>
<S> <C> <C>
ADVISORY FEES
Fees Waived Fees Payable
Disciplined Growth Portfolio
Period ended September 30, 1999 $ 36,372 $ 622,670
Year ended May 31, 1999 $ 79,837 $ 1,481,103
Year ended May 31, 1998 $ 0 $ 679,865
Equity Income Portfolio
Period ended September 30, 1999 $257,478 $ 4,258,945
Year ended May 31, 1999 $425,107 $10,582,022
Year ended May 31, 1998 $ 0 $ 7,756,161
Index Portfolio
Period ended September 30, 1999 $286,572 $ 849,293
Year ended May 31, 1999 $779,240 $ 2,351,029
Year ended May 31, 1998 $ 0 $ 1,709,358
Year ended May 31, 1997 $592,067 $ 0
International Portfolio
Period ended September 30, 2000 $191,876 $ 1,223,197
Year ended May 31, 1999 $717,860 $ 3,937,758
Year ended May 31, 1998 $117,141 $ 3,832,528
International Equity Portfolio
Period ended September 30, 1999 $ 0 $ 632,379
Year ended May 31, 1999 $ 0 $ 536,814
Large Company Growth Portfolio
Period ended September 30, 1999 $213,833 $ 4,418,020
Year ended May 31, 1999 $137,320 $ 9,043,943
Year ended May 31, 1998 $ 0 $ 6,448,644
Small Cap Index Portfolio
Period ended September 30, 1999 $ 25,681 $ 114,972
Year ended May 31, 1999 $ 54,976 $ 303,388
Year ended May 31, 1998 $ 0 $ 45,748
Small Cap Value Portfolio
Period ended September 30, 1999 $ 21,449 $ 432,524
Year ended May 31, 1999 $ 50,969 $ 1,021,928
Year ended May 31, 1998 $ 0 $ 580,454
Small Company Growth Portfolio
Period ended September 30, 1999 $ 97,671 $ 2,116,131
Year ended May 31, 1999 $ 1,559 $ 6,579,692
Year ended May 31, 1998 $ 0 $ 7,752,366
Small Company Value Portfolio
Period ended September 30, 1999 $ 25,997 $ 472,849
Year ended May 31, 1999 $ 68,547 $ 1,297,868
Year ended May 31, 1998 $ 0 $ 1,558,410
Managed Fixed Income Portfolio
Year ended May 31, 2000 $612,643 $ 1,965,288
Year ended May 31, 1999 $ 0 $ 1,307,275
Year ended May 31, 1998 $ 0 $ 975,529
Positive Return Bond Portfolio
Year ended May 31, 2000 $408,448 $ 1,310,074
Year ended May 31, 1999 $ 0 $ 871,345
Year ended May 31, 1998 $ 0 $ 727,322
Stable Income Portfolio
Year ended May 31, 2000 $ 71,543 $ 1,415,363
Year ended May 31, 1999 $ 0 $ 864,254
Year ended May 31, 1998 $ 0 $ 682,043
Strategic Value Bond Portfolio
Year ended May 31, 2000 $ 58,451 $ 964,676
Year ended May 31, 1999 $ 0 $ 1,203,467
Year ended May 31, 1998 $ 0 $ 601,240
</TABLE>
Investment Sub-Advisors. Wells Fargo has engaged Wells Capital Management
Incorporated ("WCM"), Galliard Capital Management, Inc. ("Galliard"), Peregrine
Capital Management, Inc. ("Peregrine"), Smith Asset Management Group, LP ("Smith
Group") and Schroder Investment Management North America Inc. ("Schroder")
(collectively, the "Sub-Advisors") to serve as investment sub-advisors to the
Portfolios. Subject to the direction of the Trust's Board of Trustees and the
overall supervision and control of Wells Fargo and the Trust, the Sub-Advisors
make recommendations regarding the investment and reinvestment of the
Portfolios' assets. The Sub-Advisors furnish to Wells Fargo Bank periodic
reports on the investment activity and performance of the Portfolios. The
Sub-Advisors also furnish such additional reports and information as Wells Fargo
Bank and the Trust's Board of Trustees and officers may reasonably request.
An Investment Subadvisory Agreement (the "Subadvisory Agreement") for a
Portfolio will remain in effect for a period of two years from the date of its
effectiveness and thereafter shall continue for successive one-year periods
provided such continuance is specifically approved at least annually by the
Board or by vote of the Interest holders of the Portfolio, and, in either case,
by a majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party (other than as trustees of the Trust). A
Portfolio's Subadvisory Agreement is terminable without penalty by the Board or
a majority of the outstanding voting securities of the Portfolio or by the
Advisor or Subadvisor on 60 days' written notice to the other party and will
automatically terminate in the event of its assignment.
As compensation for sub-advisory services to the Portfolios, WCM,
Galliard, Peregrine, Smith and Schroder are each entitled to receive the
following fees:
<TABLE>
<S> <C> <C>
------------------------------ --------------------- -----------------------------------
Core Portfolio Sub-Advisor Fees
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Disciplined Growth Smith 0-175M 0.35%
175-225M 0%
225-500M 0.25%
>500M 0.20%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Equity Income WCM 0-200M 0.25%
200-400M 0.20%
>400M 0.15%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Index WCM 0-200M 0.02%
>200M 0.01%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
International Schroder 0-100M 0.45%
100-200M 0.35%
200-600M 0.20%
>600M 0.185%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
International Equity WCM 0-200M 0.35%
200-400M 0.25%
>400M 0.15%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Large Company Peregrine 0-25M 0.75%
Growth 25-50M 0.60%
50-275M 0.50%
>275M 0.30%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Small Cap Index WCM 0-200M 0.02%
>200M 0.01%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Small Cap Value Smith 0-110M 0.45%
110-150M 0%
150-300M 0.30%
>300M 0.25%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Small Company Peregrine 0-50M 0.90%
Growth 50-180M 0.75%
180-340M 0.65%
340-685M 0.50%
685-735M 0.52%
>735M 0.55%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Small Company Peregrine 0-200M 0.50%
Value >200M 0.75%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Managed Fixed Galliard 0-100M 0.10%
Income Portfolio 100-200M 0.08%
> 200M 0.06%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Positive Return Peregrine 0-10M 0.40%
Portfolio 10-25M 0.30%
25M-300M 0.20%
>300M 0.10%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Strategic Value Bond Galliard 0-100M 0.13%
Portfolio 100-200M 0.10%
> 200M 0.08%
------------------------------ --------------------- -----------------------------------
------------------------------ --------------------- -----------------------------------
Stable Income Galliard 0-1500M 0.04%
Portfolio 1500-2000M 0.05%
2000-2500M 0.045%
2500-3000M 0.04%
> 3000M 0.03%
------------------------------ --------------------- -----------------------------------
</TABLE>
Administrator. The Trust has retained Wells Fargo as Administrator on
behalf of each Portfolio. Under the Administration Agreement between Wells Fargo
and the Trust, Wells Fargo shall provide as administration services, among other
things: (i) general supervision of the Funds' operations, including coordination
of the services performed by each Portfolio's investment advisor, transfer
agent, custodian, shareholder servicing agent(s), independent auditors and legal
counsel, regulatory compliance, including the compilation of information for
documents such as reports to, and filings with, the U.S. Securities and Exchange
Commission ("SEC") and state securities commissions; and preparation of proxy
statements and shareholder reports for each Portfolio; and (ii) general
supervision relative to the compilation of data required for the preparation of
periodic reports distributed to the Trust's officers and Board of Trustees.
Wells Fargo also furnish office space and certain facilities required for
conducting the Portfolios' business together with ordinary clerical and
bookkeeping services. The Administrator is not entitled to receive an
administration fee as long as it receives an administration fee at the
underlying fund level.
The Table below shows the dollar amount of administrative fees paid as
a percentage of daily net assets by each Portfolio. This information is provided
for the past three years or such shorter terms as a Portfolio has been
operational.
ADMINISTRATIVE FEES
Fee Paid
Disciplined Growth Portfolio
Period ended September 30, 1999 $ 34,593
Year ended May 31, 1999 $ 2,447
Equity Income Portfolio
Period ended September 30, 1999 $ 425,895
Year ended May 31, 1999 $ 633,095
Year ended May 31, 1998 $ 4,389
Index Portfolio
Period ended September 30, 1999 $ 283,098
Year ended May 31, 1999 $ 4,436
Year ended May 31, 1998 $ 3,746
Year ended May 31, 1997 $ 230,874
International Portfolio
Period ended September 30, 1999 $ 407,732
Year ended May 31, 1999 $1,312,586
Year ended May 31, 1998 $1,209,182
Year ended May 31, 1997 $ 129,534
International Equity Portfolio
Period ended September 30, 1999 $ 26,349
Year ended May 31, 1999 $ 0
Large Company Growth Portfolio
Period ended September 30, 1999 $ 339,848
Year ended May 31, 1999 $ 558,368
Year ended May 31, 1998 $ 4,845
Small Cap Index Portfolio
Period ended September 30, 1999 $ 22,994
Year ended May 31, 1999 $ 5,702
Year ended May 31, 1998 $ 5,562
Small Cap Value Portfolio
Period ended September 30, 1999 $ 22,764
Year ended May 31, 1999 $ 2,817
Small Company Growth Portfolio
Period ended September 30, 1999 $ 117,563
Year ended May 31, 1999 $ 363,979
Year ended May 31, 1998 $ 7,015
Small Company Value Portfolio
Period ended September 30, 1999 $ 26,269
Year ended May 31, 1999 $ 3,557
Year ended May 31, 1998 $ 5,167
Managed Fixed Income Portfolio
Year ended May 31, 2000 $ 96,373
Year ended May 31, 1999 $ 2,742
Year ended May 31, 1998 $ 2,056
Positive Return Bond Portfolio
Year ended May 31, 2000 $ 64,212
Year ended May 31, 1999 $ 2,472
Year ended May 31, 1998 $ 2,625
Stable Income Portfolio
Year ended May 31, 2000 $ 71,543
Year ended May 31, 1999 $ 2,010
Year ended May 31, 1998 $ 3,758
Strategic Value Bond Portfolio
Year ended May 31, 2000 $ 53,358
Year ended May 31, 1999 $ 2,334
Custodian. Wells Fargo Bank Minnesota, N.A. ("Wells Fargo MN"), located
at Norwest Center, 6th and Marquette, Minneapolis, Minnesota 55479, acts as
Custodian for each Portfolio. The Custodian, among other things, maintains a
custody account or accounts in the name of each Portfolio, receives and delivers
all assets for each Portfolio upon purchase and upon sale or maturity, collects
and receives all income and other payments and distributions on account of the
assets of each Portfolio, and pays all expenses of each Portfolio. For its
services as Custodian, Wells Fargo MN is entitled to receive a fee of 0.02% of
the average daily net assets of each Portfolio except the International and
International Equity Portfolios, for which it will receive a fee of 0.25% of the
average daily net assets on a annualized basis.
Fund Accountant. Forum Accounting Services, LLC ("Forum Accounting"),
located at Two Portland Square, Portland, Maine 04101, serves as Fund Accountant
for the Portfolios. Forum Accounting served as the Accountant for the
predecessor Norwest Portfolios.
For its services as Accountant, Forum Accounting is entitled to receive
a monthly base fee per Portfolio ranging from $4,667 to $6,333 for Portfolios
with significant holdings of asset-backed securities. Forum Accounting is also
entitled to receive a fee equal to 0.0025% of the average annual daily net
assets of each Portfolio.
Code of Ethics. The Fund Complex, the Advisor, the Sub-Advisors and
Stephens each have adopted a code of ethics which contains policies on personal
securities transactions by "access persons." These policies substantially comply
in all material respects with the amendments to Rule 17j-1 under the 1940 Act as
set forth in the August 20, 1999 Adopting Release. Each code of ethics, among
other things, permits access persons to invest in certain securities, subject to
various restrictions and requirements. More specifically, each code of ethics
either prohibits its access persons from purchasing or selling securities that
may be purchased or held by a Fund or permits such access persons to purchase or
sell such securities, subject to certain restrictions. For purposes of a code of
ethics, an access person means (i) a director, trustee or officer of a fund or
investment adviser; (ii) any employee of a fund or investment adviser (or any
company in a control relationship to a fund or investment adviser) who, in
connection makes, participates in, or obtains information about the purchase or
sale of securities by a fund, or whose functions relate to the making of any
recommendations with respect to the purchases or sales; and (iii) any natural
person in a control relationship to a fund or investment adviser who obtains
information concerning recommendations made to a fund regarding the purchase or
sale of securities. Portfolio managers and other persons who assist in the
investment process are subject to additional restrictions. The above
restrictions do not apply to purchases or sales of certain types of securities,
including mutual fund shares, money market instruments and certain U.S.
Government securities. To facilitate enforcement, the codes of ethics generally
require that an access person, other than "disinterested" directors or trustees,
submit reports to a designated compliance person regarding transactions
involving securities which are eligible for purchase by a Fund. The codes of
ethics for the Fund Complex, Advisor, Sub-Advisors and Stephens are on public
file with, and are available from, the SEC.
Counsel: Morrison & Foerster LLP serves as legal counsel to the Trust
and the Portfolios. The firm's address is 2000 Pennsylvania Avenue, N.W.,
Suite 5500, Washington, D.C. 20006-1812.
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Trust has no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities. Subject to policies
established by the Trust's Board of Trustees, Wells Fargo is responsible for
each Portfolio's investment decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Trust to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While Wells Fargo Bank generally seeks
reasonably competitive spreads or commissions, the Portfolios will not
necessarily be paying the lowest spread or commission available.
Purchases and sales of equity securities on a securities exchange are
effected through brokers who charge a negotiated commission for their services.
Orders may be directed to any broker including, to the extent and in the manner
permitted by applicable law, Stephens or Wells Fargo Securities Inc. In the
over-the-counter market, securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price that includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount.
Purchases and sales of non-equity securities usually will be principal
transactions. Portfolio securities normally will be purchased or sold from or to
dealers serving as market makers for the securities at a net price. Each of the
Portfolios also will purchase portfolio securities in underwritten offerings and
may purchase securities directly from the issuer. Generally, municipal
obligations and taxable money market securities are traded on a net basis and do
not involve brokerage commissions. The cost of executing a Portfolio's
securities transactions will consist primarily of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated with the Trust
are prohibited from dealing with the Trust as a principal in the purchase and
sale of securities unless an exemptive order allowing such transactions is
obtained form the SEC or an exemption is otherwise available. The Portfolio may
purchase securities form underwriting syndicates of which Stephens or Wells
Fargo is a member under certain conditions in accordance with the provision of a
rule adopted under the 1940 Act and in compliance with procedures adopted by the
Board of Trustees.
In placing orders for securities of a Portfolio, Wells Fargo is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that Wells Fargo will seek to execute each
transaction at a price and commission, if any, that provide the most favorable
total cost or proceeds reasonably attainable in the circumstances. Commission
rates are established pursuant to negotiations with the broker based on the
quality and quantity of execution services provided by the broker in the light
of generally prevailing rates. The allocation of orders among brokers and the
commission rates paid are reviewed periodically by the Board of Trustees.
Wells Fargo, as the Investment Advisor of each of the Portfolios, may,
in circumstances in which two or more dealers are in a position to offer
comparable results for a Portfolio investment transaction, give preference to a
dealer that has provided statistical or other research services to Wells Fargo.
By allocating transactions in this manner, Wells Fargo is able to supplement its
research and analysis with the views and information of securities firms.
Information so received will be in addition to, and not in lieu of, the services
required to be performed by Wells Fargo under the Advisory Contracts, and the
expenses of Wells Fargo will not necessarily be reduced as a result of the
receipt of this supplemental research information. Furthermore, research
services furnished by dealers through which Wells Fargo places securities
transactions for a Portfolio may be used by Wells Fargo in servicing its other
accounts, and not all of these services may be used by Wells Fargo in connection
with advising the Portfolios.
Portfolio Turnover. The portfolio turnover rate is not a limiting
factor when Wells Fargo Bank deems portfolio changes appropriate. Changes may be
made in the portfolios consistent with the investment objectives and policies of
the Portfolios whenever such changes are believed to be in the best interests of
the Portfolios and their Interest holders. The portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of portfolio securities
by the average monthly value of the Portfolio's investment securities. For
purposes of this calculation, portfolio securities exclude all securities having
a maturity when purchased of one year or less. Portfolio turnover generally
involves some expenses to the Portfolios, including brokerage commissions or
dealer mark-ups and other transaction costs on the sale of securities and the
reinvestment in other securities. Portfolio turnover also can generate
short-term capital gain tax consequences. Portfolio turnover rate is not a
limiting factor when Wells Fargo deems portfolio changes appropriate.
From time to time, Wells Fargo and Stephens may waive fees from the
Portfolio in whole or in part. Any such waiver will reduce expenses and,
accordingly, have a favorable impact on the Portfolio's performance.
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
DESCRIPTION OF INTERESTS
Under the Declaration of Trust, the Trustees are authorized to issue
Interests in one or more separate and distinct series. Investments in each
Portfolio have no preference, preemptive, conversion or similar rights and are
fully paid and nonassessable, except as set forth below. Each investor in a
Portfolio is entitled to a vote in proportion to the amount of its investment
therein. Investors in the Portfolios will all vote together in certain
circumstances (e.g., election of the Trustees and ratification of auditors, as
required by the 1940 Act and the rules thereunder). One or more Portfolios could
control the outcome of these votes. Investors do not have cumulative voting
rights, and investors holding more than 50% of the aggregate interests in the
Trust or in a Portfolio, as the case may be, may control the outcome of votes.
The Trust is not required and has no current intention to hold annual meetings
of investors, but the Trust will hold special meetings of investors when (1) a
majority of the Trustees determines to do so or (2) investors holding at least
10% of the interests in the Trust (or a Portfolio) request in writing a meeting
of investors in the Trust (or Portfolio). Except for certain matters
specifically described in the Declaration Trust, the Trustees may amend the
Trust's Declaration of Trust without the vote of Interest holders.
The Trust, with respect to a Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved by
the Trust's Board. A Portfolio may be terminated (1) upon liquidation and
distribution of its assets, if approved by the vote of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act) or (2) by
the Trustees on written notice to the Portfolio's investors. Upon liquidation or
dissolution of any Portfolio, the investors therein would be entitled to share
pro rata in its net assets available for distribution to investors.
The Trust is organized as a business trust under the laws of the State
of Delaware. The Trust's Interest holders are not personally liable for the
obligations of the Trust under Delaware law. The Delaware Business Trust Act
provides that an Interest holder of a Delaware business trust shall be entitled
to the same limitation of liability extended to shareholders of private
corporations for profit. However, no similar statutory or other authority
limiting business trust Interest holder liability exists in many other states,
including Texas. As a result, to the extent that the Trust or an Interest holder
is subject to the jurisdiction of courts in those states, the courts may not
apply Delaware law, and may thereby subject the Trust to liability. To guard
against this risk, the Trust Instrument of the Trust disclaims liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation and instrument entered into by the Trust or
its Trustees, and provides for indemnification out of Trust property of any
Interest holder held personally liable for the obligations of the Trust. Thus,
the risk of an Interest holder incurring financial loss beyond his investment
because of shareholder liability is limited to circumstances in which (1) a
court refuses to apply Delaware law, (2) no contractual limitation of liability
is in effect, and (3) the Trust itself is unable to meet its obligations.
ITEM 18. PURCHASE, REDEMPTION, AND PRICING OF SHARES
Beneficial Interests in the Portfolios are issued by the Trust in
private placement transactions which do not involve a "public offering" within
the meaning of Section 4(2) of the 1933 Act. Investments in the Portfolios may
only be made by investment companies or other entities which are "accredited
investors" within the meaning of Regulation D under the 1933 Act.
In addition to cash purchases of Interests, if accepted by the Trust,
investments in Beneficial Interests of a Portfolio may be made in exchange for
securities which are eligible for purchase by the Portfolio and consistent with
the Portfolio's investment objective and policies as described in Part A. In
connection with an in-kind securities payment, a Portfolio may require, among
other things, that the securities (i) be valued on the day of purchase in
accordance with the pricing methods used by the Portfolio; (ii) are accompanied
by satisfactory assurance that the Portfolio will have good and marketable title
to such securities received by it; (iii) are not subject to any restrictions
upon resale by the Portfolio; (iv) be in proper form for transfer to the
Portfolio; and (v) are accompanied by adequate information concerning the basis
and other tax matters relating to the securities. All dividends, interest,
subscription or other rights pertaining to such securities shall become the
property of the Portfolio engaged in the in-kind purchase transaction and must
be delivered to such Portfolio by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for investment
and not for immediate resale. Shares purchased in exchange for securities
generally cannot be redeemed until the transfer has settled.
In 1994, the Commission granted an exemptive order which permitted CT,
certain Norwest Advantage funds and other open-end management investment
companies or their separate series for which Norwest Bank Minnesota, N.A.
("Norwest") (or any person controlled by, controlling or under common control
with Norwest) acts as investment adviser to invest in the core portfolios of CT.
The original exemptive order, which imposed several substantive conditions upon
CT and Norwest Advantage funds, was amended effective August 6, 1996, to permit
any Norwest Advantage fund to invest all or a portion of its assets in a CT
portfolio, irrespective of investment style, and which removed certain
restrictions imposed on CT thereby permitting CT to accept investments from
persons other than Norwest Advantage funds. The exemptive order remains in
effect for the successor entities to these parties.
The Trust is required to redeem all full and fractional units of
Interests in the Trust. The redemption price is the net asset value per unit of
each Portfolio next determined after receipt by the Portfolio of a request for
redemption in proper form.
The Trustees may specify conditions, prices, and places of redemption,
and may specify binding requirements for the proper form or forms of requests
for redemption. Payment of the redemption price may be wholly or partly in
securities or other assets at the value of such securities or assets used in
such determination of Net Asset Value ("NAV"), or may be in cash. Upon
redemption, Interests shall not be cancelled and may be reissued from time to
time. The Trustees may require Interest holders to redeem Interest for any
reason under terms set by the Trustees, including the failure of a Interest
holder to supply a personal identification number if required to do so, or to
have the minimum investment required, or to pay when due for the purchase of
Interest issued to him. To the extent permitted by law, the Trustees may retain
the proceeds of any redemption of Interests required by them for payment of
amount due and owing by a Interest holder to the Trust or any Series or Class.
Notwithstanding the foregoing, the Trustees may postpone payment of the
redemption price and may suspend the right of the Interest holders to require
any Series or Class to redeem Interests during any period of time when and to
the extent permissible under the 1940 Act.
If the Trustees postpone payment of the redemption price and suspend
the right of Interest holders to redeem their Interests, such suspension shall
take effect at the time the Trustees shall specify, but not later than the close
of business on the business day next following the declaration of suspension.
Thereafter Interest holders shall have no right of redemption or payment until
the Trustees declare the end of the suspension. If the right of redemption is
suspended, an Interest holder may either withdraw his or her request for
redemption or receive payment based on the NAV per Interest next determined
after the suspension-terminates.
If the Trustees shall determine that direct or indirect ownership of
Interests of any Portfolio has become concentrated in any person to an extent
that would disqualify any Portfolio as a regulated investment company under the
Internal Revenue Code, then the Trustees shall have the power (but not the
obligation) by lot or other means they deem equitable to (a) call for redemption
by any such person of a number, or a principal amount, of Interests sufficient
to maintain or bring the direct or indirect ownership of Interests into
conformity with the requirements for such qualification, and (b) refuse to
transfer or issue shares to any person whose acquisition of Interests in
question would, in the Trustee's judgment, result in such disqualification. Any
such redemption shall be effected at the redemption price and in the manner
described above. Interest holders shall upon demand disclose to the Trustees in
writing such information concerning direct and indirect ownership of Interests
as the Trustees deem necessary to comply with the requirements of any taxing
authority.
DETERMINATION OF NET ASSET VALUE
NAV is determined as of the close of regular trading (currently 1:00
p.m. Pacific time/3:00 p.m. Central time) on each day the New York Stock
Exchange ("NYSE") is open for business. Expenses and fees, including Advisory
fees, are accrued daily and are taken into account for the purpose of
determining the NAV of the Portfolios' Interests.
Securities of a Portfolio for which market quotations are available are
valued at latest prices. Any security for which the primary market is an
exchange is valued at the last sale price on such exchange on the day of
valuation or, if there was no sale on such day, the latest bid price quoted on
such day. If the values reported on a foreign exchange are materially affected
by events occurring after the close of the foreign exchange, assets may be
valued by a method that the Board of Trustees believes accurately reflects fair
value. In the case of other securities, including U.S. Government Securities but
excluding money market instruments maturing in 60 days or less, the valuations
are based on latest quoted bid prices. Money market instruments and debt
securities maturing in 60 days or less are valued at amortized cost. The assets
of a Portfolio , other than money market instruments or debt securities maturing
in 60 days or less, are valued at latest quoted bid prices. Futures contracts
will be marked to market daily at their respective settlement prices determined
by the relevant exchange. Prices may be furnished by a reputable independent
pricing service approved by the Trust's Board of Trustees. Prices provided by an
independent pricing service may be determined without exclusive reliance on
quoted prices and may take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. All other securities and other assets of a Portfolio for which current
market quotations are not readily available are valued at fair value as
determined in good faith by the Trust's Board of Trustees and in accordance with
procedures adopted by the Trustees.
ITEM 19. TAXATION.
The Trust is organized as a business trust under Delaware law. Under
the Trust's current classification for federal income tax purposes, it is
intended that each Portfolio will be treated as a non-publicly traded
partnership for such purposes and, therefore such Portfolio will not be subject
to any federal income tax. However, each investor in a Portfolio will be taxable
on its share (as determined in accordance with the governing instruments of the
Trust) of such Portfolio's income and gains in determining its federal income
tax liability. The determination of such share will be made in accordance with
the Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
The Trust's taxable year-end is the last day of May. Although the Trust
will not be subject to federal income tax, it will file appropriate federal
income tax returns.
It is intended that each Portfolio's assets, income and distributions
will be managed in such a way that an entity electing and qualifying as a
"regulated investment company" under the Code can continue to so qualify by
investing substantially all of its assets through a Portfolio, provided that the
regulated investment company meets other requirements for such qualification not
within the control of the Portfolio (e.g., distributing at least 90% of the
regulated investment company's "investment company taxable income" annually).
ITEM 20. UNDERWRITERS.
Stephens Inc. (the "Placement Agent") is the exclusive placement agent
for the Interests in the Portfolios. Pursuant to a Placement Agency Agreement,
the Placement Agent, as agent, sells Interests in the Portfolios on a continuous
basis and transmits purchase and redemption orders that it receives to the
Trust.
The Placement Agency Agreement will continue year to year as long as
such continuance is approved at least annually in accordance with the 1940 Act
and the rules thereunder. This agreement shall terminate automatically in the
event of its assignment (as defined in the 1940 Act). This agreement may, in any
event, be terminated at any time, without the payment of any penalty, by the
Trust upon 60 days' written notice to the Placement Agent or by the Placement
Agent at any time after the second anniversary of the effective date of this
agreement on 60 days' written notice to the Trust.
ITEM 21. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
KPMG LLP has been selected as the independent auditors for the Trust.
KPMG LLP provides audit services, tax return preparation and assistance and
consultation in connection with review of certain SEC filings. KPMG LLP's
address is Three Embarcadero Center, San Francisco, California 94111.
The annual reports, including the independent auditors' report for the
fiscal period ended September 30, 1999, which includes the financial statements
for the equity portfolios of the predecessor Core Trust (Delaware), and for the
fiscal year ended May 31, 2000 for the income portfolios of the Trust, are
incorporated herein by reference.
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SCHEDULE A
DESCRIPTION OF RATINGS
The following summarizes the highest six ratings used by Standard &
Poor's Corporation ("S&P") for corporate and municipal bonds. The first four
ratings denote investment-grade securities.
AAA - This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay interest
and repay principal.
AA - Debt rated AA is considered to have a very strong capacity to
pay interest and repay principal and differs from AAA issues only in a
small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher-rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for those
in higher-rated categories.
BB, B - Bonds rated BB and B are regarded, on balance as
predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. Debt
rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payments. Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay
principal.
To provide more detailed indications of credit quality, the AA, A and
BBB, BB and B ratings may be modified by the addition of a plus or minus sign to
show relative standing within these major rating categories.
The following summarizes the highest six ratings used by Moody's
Investors Service, Inc. ("Moody's") for corporate and municipal bonds. The first
four denote investment grade securities.
Aaa - Bonds that are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the Fundamentally strong
position of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered upper medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds that are rated Baa are considered medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba - Bonds that are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not as well safeguarded during both good times and bad times over
the future. Uncertainty of position characterizes bonds in this class.
B - Bond that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Moody's applies numerical modifiers (1, 2 and 3) with respect to
corporate bonds rated Aa through B. The modifier 1 indicates that the bond being
rated ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the bond ranks
in the lower end of its generic rating category. With regard to municipal bonds,
those bonds in the Aa, A and Baa groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aal, A1 or Baal,
respectively.
The following summarizes the highest four ratings used by Duff & Phelps
Credit Rating Co. ("D&P") for bonds, each of which denotes that the securities
are investment grade.
AAA - Bonds that are rated AAA are of the highest credit quality.
The risk factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.
AA - Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A - Bonds that are rated A have protection factors which are
average but adequate. However risk factors are more variable and greater
in periods of economic stress.
BBB - Bonds that are rated BBB have below average protection
factors but still are considered sufficient for prudent investment.
Considerable variability in risk exists during economic cycles.
To provide more detailed indications of credit quality, the AA, A and
BBB ratings may modified by the addition of a plus or minus sign to show
relative standing within these major categories.
The following summarizes the highest four ratings used by Fitch
Investors Service, Inc. ("Fitch") for bonds, each of which denotes that the
securities are investment grade:
AAA - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and
BBB ratings may be modified by the addition of a plus or minus sign to show
relative standing within these major rating categories.
The following summarizes the two highest ratings used by Moody's for
short-term municipal notes and variable-rate demand obligations:
MIG-1/VMIG-1 -- Obligations bearing these designations are of the best
quality, enjoying strong protection from established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
MIG-2/VMIG-2 -- Obligations bearing these designations are of high
quality, with ample margins of protection although not so large as in the
preceding group.
The following summarizes the two highest ratings used by S&P for
short-term municipal notes:
SP-1 - Indicates very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety characteristics
are given a "plus" (+) designation.
SP-2 - Indicates satisfactory capacity to pay principal and interest.
The three highest rating categories of D&P for short-term debt, each of
which denotes that the securities are investment grade, are D-1, D-2, and D-3.
D&P employs three designations, D-1+, D-1 and D-1-, within the highest rating
category. D-1+ indicates highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of Master Portfolios, is judged to be "outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations." D-1 indicates very high
certainty of timely payment. Liquidity factors are excellent and supported by
good Fundamental protection factors. Risk factors are considered to be minor.
D-1 indicates high certainty of timely payment. Liquidity factors are strong and
supported by good Fundamental protection factors. Risk factors are very small.
D-2 indicates good certainty of timely payment. Liquidity factors and company
Fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small. D-3 indicates satisfactory liquidity and other protection factors which
qualify the issue as investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
The following summarizes the two highest rating categories used by
Fitch for short-term obligations each of which denotes that the securities are
investment grade:
F-1+ securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of assurance
for timely payment.
F-1 securities possess very strong credit quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less in degree than
issues rated F-1+.
F-2 securities possess good credit quality. Issues carrying this rating
have a satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned the F-1+ and F-1 ratings.
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of senior short-term
promissory obligations. Issuers rated Prime-2 (or related supporting
institutions) are considered to have a strong capacity for repayment of senior
short-term promissory obligations. This will normally be evidenced by many of
the characteristics of issuers rated Prime-1, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
For commercial paper, D&P uses the short-term debt ratings described
above.
For commercial paper, Fitch uses the short-term debt ratings described
above.
Thomson BankWatch, Inc. ("BankWatch") ratings are based upon a
qualitative and quantitative analysis of all segments of the organization
including, where applicable, holding company and operating subsidiaries.
BankWatch ratings do not constitute a recommendation to buy or sell securities
of any of these companies. Further, BankWatch does not suggest specific
investment criteria for individual clients.
BankWatch long-term ratings apply to specific issues of long-term debt
and preferred stock. The long-term ratings specifically assess the likelihood of
untimely payment of principal or interest over the term to maturity of the rated
instrument. The following are the four investment grade ratings used by
BankWatch for long-term debt:
AAA - The highest category; indicates ability to repay principal
and interest on a timely basis is extremely high.
AA - The second highest category; indicates a very strong ability
to repay principal and interest on a timely basis with limited incremental
risk versus issues rated in the highest category.
A - The third highest category; indicates the ability to repay
principal and interest is strong. Issues rated "A" could be more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.
BBB - The lowest investment grade category; indicates an acceptable
capacity to repay principal and interest. Issues rated "BBB" are, however,
more vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.
Long-term debt ratings may include a plus (+) or minus (-) sign to
indicate where within a category the issue is placed.
The BankWatch short-term ratings apply to commercial paper, other
senior short-term obligations and deposit obligations of the entities to which
the rating has been assigned. The BankWatch short-term ratings specifically
assess the likelihood of an untimely payment of principal or interest.
TBW-1 The highest category; indicates a very high
likelihood that principal and interest will be paid
on a timely basis.
TBW-2 The second highest category; while the degree of
safety regarding timely repayment of principal and
interest is strong, the relative degree of safety is
not as high as for issues rated "TBW-1".
TBW-3 The lowest investment grade category; indicates that
while more susceptible to adverse developments (both
internal and external) than obligations with higher
ratings, capacity to service principal and interest
in a timely fashion is considered adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
The following summarizes the four highest long-term debt ratings used
by IBCA Limited and its affiliate, IBCA Inc. (collectively "IBCA"):
AAA - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial such that adverse changes in business, economic
or financial conditions are unlikely to increase investment risk
significantly.
AA - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic or
financial conditions may increase investment risk albeit not very
significantly.
A - Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk.
BBB - Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment
risk than for obligations in other categories.
A plus or minus sign may be appended to a rating below AAA to denote
relative status within major rating categories.
The following summarizes the two highest short-term debt ratings used by
IBCA:
A1+ When issues possess a particularly strong credit feature, a
rating of A1+ is assigned.
A1 - Obligations supported by the highest capacity for timely
repayment.
A2 - Obligations supported by a good capacity for timely repayment.
<PAGE>
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WELLS FARGO CORE TRUST
File No. 811-9689
PART C
OTHER INFORMATION
<TABLE>
<S> <C> <C>
Item 23. Exhibits.
Exhibit
Number Description
(a) - Amended and Restated Declaration of Trust, incorporated by reference to the Registration
Statement on
Form N-1A, filed November 8, 1999.
(b) - Not applicable.
(c) - Not applicable.
(d)(1) - Investment Advisory Contract with Wells Fargo Bank, N.A., incorporated by reference to the
Registration
Statement on Form N-1A, filed November 8, 1999.
(2)(i) - Sub-Advisory Contract with Wells Capital Management, Inc., incorporated by reference to the
Registration
Statement on Form N-1A, filed November 8, 1999.
(ii) - Sub-Advisory Contract with Galliard Capital Management, Inc., incorporated by reference to the
Registration Statement on Form N-1A, filed November 8, 1999.
(iii) - Sub-Advisory Contract with Schroder Investment Management, Inc., incorporated by reference to the
Registration Statement on Form N-1A, filed November 8, 1999.
(iv) - Sub-Advisory Contract with Smith Asset Management, L.P., incorporated by reference to the
Registration Statement on Form N-1A, filed November 8, 1999.
(v) - Sub-Advisory Contract with Peregrine Capital Management, Inc., incorporated by reference to the
Registration Statement on Form N-1A, filed November 8, 1999.
(e) - Not applicable pursuant to General Instruction (B)(2)(b).
(f) - Not applicable.
(g) - Custody Agreement with Norwest Bank Minnesota, N.A., incorporated by reference to the Registration
Statement on Form N-1A, filed November 8, 1999.
(h)(1) - Administration Agreement with Wells Fargo Bank, N.A., incorporated by reference to the Registration
Statement on Form N-1A, filed November 8, 1999.
(2) - Placement Agency Agreement with Stephens, Inc., incorporated by reference to the Registration
Statement on Form N-1A, filed November 8, 1999.
(3) - Fund Accounting Agreement with Forum Accounting Services, LLC, incorporated by reference to the
Registration Statement on Form N-1A, filed November 8, 1999.
(i) - Not applicable, pursuant to General Instruction (B)(2)(b).
(j) - Not applicable, pursuant to General Instruction (B)(2)(b).
(k) - Not applicable, pursuant to General Instruction (B)(2)(b).
(l) - Not applicable.
(m) - Not applicable.
(n) - Rule 18f-3 Plan, incorporated by reference to the Registration Statement on Form N-1A, filed
November 8, 1999.
(p)(1) - Joint Code of Ethics for Funds Trust, Core Trust and Variable Trust, filed herewith.
(2) - Wells Fargo Bank, N.A. Code of Ethics, filed herewith.
(3) - Galliard Capital Management, Inc. Code of Ethics, filed herewith.
(4) - Peregrine Capital Management, Inc. Code of Ethics, filed herewith.
(5) - Schroder Investment Management North America Inc.
Code of Ethics, filed herewith.
(6) - Smith Asset Management Group, L.P. Code of Ethics, filed herewith.
(7) - Wells Capital Management Incorporated Code of Ethics, filed herewith.
</TABLE>
Item 24. Persons Controlled by or Under Common Control with the Fund.
Registrant believes that no person is controlled by or under
common control with Registrant.
Item 25. Indemnification.
Article V of the Registrant's Declaration of Trust limits the
liability and, in certain instances, provides for mandatory indemnification of
the Registrant's trustees, officers, employees, agents and holders of beneficial
interests in the Trust. In addition, the Trustees are empowered under Section
3.9 of the Registrant's Declaration of Trust to obtain such insurance policies
as they deem necessary.
Item 26. Business and Other Connections of Investment Adviser.
(a) Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly-owned
subsidiary of Wells Fargo & Company, serves as investment adviser to all of the
Registrant's investment portfolios, and to certain other registered open-end
management investment companies. Wells Fargo Bank's business is that of a
national banking association with respect to which it conducts a variety of
commercial banking and trust activities.
To the knowledge of Registrant, none of the directors or
executive officers of Wells Fargo Bank is or has been at any time during the
past two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature, except that certain executive officers also
hold various positions with and engage in business for Wells Fargo & Company
and/or its subsidiaries.
(b) Wells Capital Management Incorporated ("WCM"), a
wholly-owned subsidiary of Wells Fargo Bank, N.A., serves as sub-adviser to
various Funds of the Trust. The description of WCM in Parts A and B of this
Registration Statement is incorporated by reference in Parts A and B of this
Registration Statement is incorporated by reference herein. None of the
directors and principal executive officers of WCM serves, or has served in the
past two fiscal years, in such capacity for any other entity.
(c) Peregrine Capital Management, Inc. ("Peregrine"), an
indirect wholly-owned subsidiary of Wells Fargo & Company, serves as sub-adviser
to various Funds of the Trust. The description of Peregrine in Parts A and B of
the Registration Statement, is incorporated by reference herein. To the
knowledge of the Registrant, none of the directors or executive officers of this
sub-adviser is or has been at any time during the last two fiscal years engaged
in any other business, profession, vocation or employment of a substantial
nature.
(d) Schroder Investment Management North America Inc.
("SIMNA"), serves as sub-adviser to various Funds of the Trust. The description
of SIMNA in Parts A and B of the Registration Statement are incorporated by
reference herein. The address is 787 Seventh Avenue, 34th Floor, New York, NY
10019. Schroder Capital Management International Limited ("Schroder Ltd.") is a
United Kingdom affiliate of SIMNA which provides investment management services
to international clients located principally in the United States.
Schroder Ltd. and Schroders p.l.c. are located at 31 Gresham St., London ECZV
7QA, United Kingdom. To the knowledge of the Registrant, none of the directors
or executive officers of this sub-adviser is or has been at any time during the
last two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature.
(e) Galliard Capital Management, Inc. ("Galliard"), an indirect,
wholly-owned subsidiary of Wells Fargo & Company serves as sub-adviser to
various Funds of the Trust. The descriptions of Galliard. in Parts A and B of
the Registration Statement, are incorporated by reference herein. The address of
Galliard is LaSalle Plaza, Suite 2060, 800 LaSalle Avenue, Minneapolis,
Minnesota 55479. To the knowledge of the Registrant, none of the directors or
executive officers of this sub-adviser is or has been at any time during the
last two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature.
(f) Smith Asset Management, L.P. ("Smith"), an indirect,
partially-owned subsidiary of Wells Fargo & Company serves as sub-adviser to
various Funds of the Trust. The descriptions of Smith in Parts A and B of the
Registration Statement, are incorporated by reference herein. The address of
Smith is 300 Crescent Court, Suite 750, Dallas, Texas 75201. To the knowledge of
the Registrant, none of the directors or executive officers of this sub-adviser
is or has been at any time during the last two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature.
Item 27. Principal Underwriters.
(a) Stephens Inc. ("Stephens"), placement agent for the
Registrant, does not presently act as investment adviser for any other
registered investment companies, but does act as principal underwriter for
Barclays Global Investors Funds, Inc., Nations Fund, Inc., Nations Fund Trust,
Nations Annuity Trust, Nations LifeGoal Funds, Inc., Nations Reserves, Nations
Funds Trust, Wells Fargo Variable Trust and Wells Fargo Funds Trust, and is the
exclusive placement agent for Nations Master Investment Portfolio and Wells
Fargo Core Trust, all of which are registered open-end management investment
companies.
(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D thereto, filed by Stephens with the Securities and Exchange Commission
pursuant to the Investment Advisors Act of 1940 (file No. 501-15510).
(c) Not applicable.
Item 28. Location of Accounts and Records.
(a) The Registrant maintains accounts, books and other documents
required by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder (collectively, "Records") at the offices of Wells Fargo Bank, N.A.,
525 Market Street, San Francisco, California 94163.
(b) Wells Fargo Bank maintains all Records relating to its
services as investment adviser and administrator at 525 Market Street, San
Francisco, California 94105.
(c) Stephens maintains all Records relating to its services as
placement agent at 111 Center Street, Little Rock, Arkansas 72201.
(d) Wells Fargo Bank Minnesota, N.A. maintains all Records
relating to its services as custodian at 6th & Marquette, Minneapolis, Minnesota
55479-0040.
(e) Wells Capital Management Incorporated maintains all Records
relating to its services as investment sub-adviser at 525 Market Street, San
Francisco, California 94105.
(f) Peregrine Capital Management, Inc. maintains all Records
relating to its services as investment sub-adviser at 800 LaSalle Avenue,
Minneapolis, Minnesota 55479.
(g) Galliard Capital Management, Inc. ("Galliard") maintains
all Records relating to its services as investment sub-adviser at 800 LaSalle
Avenue, Suite 2060, Minneapolis, Minnesota 55479.
(h) Smith Asset Management Group, LP maintains all Records
relating to its services as investment sub-adviser at 500 Crescent Court, Suite
250, Dallas, Texas 75201.
(i) Schroder Investment Management, North America Inc.
maintains all Records relating to its services as investment
sub-adviser at 787 Seventh Avenue, New York, New York 10019.
Item 29. Management Services.
Other than as set forth under the captions "Management,
Organization and Capital Structure" in Part A of this Registration Statement and
"Management of the Trust" in the Part B of this Registration Statement, the
Registrant is not a party to any management-related service contract.
Item 30. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Amendment to its Registration Statement on
Form N-1A to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of San Francisco, State of California on the 2nd day of
October, 2000.
WELLS FARGO CORE TRUST
By /s/ Dorothy A. Peters
Dorothy A. Peters
Assistant Secretary
<PAGE>
WELLS FARGO CORE TRUST
FILE NO. 811-9689
EXHIBIT INDEX
Exhibit Number Description
EX-99.B(p)(1) Joint Code of Ethics for Funds Trust, Core Trust
and Variable Trust
(2) Wells Fargo Bank, N.A. Code of Ethics
(3) Galliard Capital Management, Inc. Code of Ethics
(4) Peregrine Capital Management, Inc. Code of Ethics
(5) Schroder Investment Management North America Inc.
Code of Ethics
(6) Smith Asset Management Group, L.P. Code of Ethics
(7) Wells Capital Management Incorporated Code of
Ethics
<PAGE>
EX-99.B(p)(1)
WELLS FARGO FUNDS TRUST
WELLS FARGO VARIABLE TRUST
WELLS FARGO CORE TRUST
JOINT CODE OF ETHICS
Adopted Under Rule 17j-1
The Wells Fargo Funds Trust, the Wells Fargo Variable Trust and the
Wells Fargo Core Trust (including the Core Trust's "feeder funds" that are
advised or administered by Wells Fargo Bank or an affiliate thereof) (each a
"Fund" and, together, the "Funds") are confident that their officers and
trustees act with integrity and good faith. The Funds recognize, however, that
personal interests may conflict with the Funds' interests where officers or
trustees:
o Know about present or future Fund portfolio transactions, or
o Have the power to influence Fund portfolio transactions; and
o Engage in personal securities transactions.
In an effort to prevent these conflicts and in accordance with
Rule 17j-1 under the Investment Company Act of 1940 (the "1940 Act"), the Funds
have adopted this Joint Code of Ethics (the "Code") to prohibit transactions
that create or may create conflicts of interest, establish reporting
requirements and create enforcement procedures. Although the Funds have adopted
the Code jointly pursuant to Rule 17j-1 under the 1940 Act, each Fund is
responsible for implementing the Code on behalf of, and for compliance therewith
by, its own "access persons" as defined under Rule 17j-1.
I. Who is covered by the Code of Ethics?
o All Fund officers;
o All trustees, both interested and independent; and
o Natural persons in a control relationship with a Fund
who obtain information concerning recommendations
about the purchase or sale of a security by a
portfolio of a Fund (a "Portfolio"). Collectively,
these persons are called "access persons." The Funds
currently do not have any natural control
persons.
II. About this Code of Ethics.
This Code sets forth in the attached sections specific prohibitions on
securities transactions and reporting requirements that apply to Fund officers
and trustees. The prohibitions and requirements that apply to each person
covered by this Code are included under Section III (General Principles) and
Section IV (Required Course of Conduct). For your specific reporting
requirements, please refer to Part A or B, as indicated below. Definitions of
underlined terms are included in Appendix A.
o Independent trustees Part A
o Interested trustees, Fund officers and natural Part B
control persons
The remainder of this Code sets forth review and enforcement
responsibilities (Sections V), obligations of investment advisers and principle
underwriters (Section VII), recordkeeping requirements (Section VIII) and
miscellaneous information (Section IX).
III. Statement of General Principles.
In recognition of the trust and confidence placed in the Funds by their
shareholders, and because the Funds believe that their operations should benefit
their shareholders, the Funds have adopted the following general principles to
guide their access persons.
(1) Our shareholders' interests are paramount. You must place
shareholder interests before your own.
(2) You must accomplish all personal securities transactions in a
manner that avoids any conflict between your personal
interests and those of the Fund and its shareholders.
(3) You must avoid actions or activities that allow (or appear to
allow) you or your family to profit or benefit from your
position with a Fund, or that bring into question your
independence or judgment.
IV. Required Course of Conduct.
(1) Prohibition Against Fraud, Deceit and Manipulation.
You cannot, in connection with the purchase or sale, directly
or indirectly, of a security held or to be acquired by any
Portfolio:
(A) employ any device, scheme or artifice to defraud any
Portfolio;
(B) make to a Fund or Portfolio any untrue statement of a
material fact or omit to state to a Fund or Portfolio
a material fact necessary in order to make the
statements made, in light of the circumstances under
which they are made, not misleading;
(C) engage in any act, practice or course of business
which would operate as a fraud or deceit upon any
Fund or Portfolio; or
(D) engage in any manipulative practice with respect to any Fund or Portfolio.
(2) Limits on Accepting or Receiving Gifts.
You cannot accept or receive any gift of more than de minims
value from any person or entity that does business with or on
behalf of the Funds.
(3) Reporting Requirements.
Each quarter you must report transactions in securities that
you beneficially own. These reports must be submitted no later
than 10 days after the end of the quarter. You also may be
required to report your securities holdings initially, when
you become an access person, and annually thereafter. See Part
A or B, as appropriate, for your specific reporting
requirements.
Within 10 days of becoming an access person of a Fund, and
each year thereafter, each such person must complete the
Compliance Certification, attached as Appendix F.
V. Review and Enforcement of the Code.
(1) Appointment of a Review Officer.
Each Fund's President will appoint a review officer (the
"Review Officer") to perform the duties described below.
(2) The Review Officer's Duties and Responsibilities.
(A) The Review Officer shall notify each person who becomes an
access person of a Fund and who is required to report under
this Code of Ethics of their reporting requirements no later
than 10 days before the first quarter in which such person is
required to begin reporting.
(B) The Review Officer will, on a quarterly basis, compare all
reported personal securities transactions with the Fund's
completed portfolio transactions and a list of securities that
were being considered for purchase or sale by a Fund's
investment adviser(s) during the period to determine whether a
Code violation may have occurred. Before determining that a
person has violated the Code, the Review Officer must give the
person an opportunity to supply explanatory material.
(C) If the Review Officer finds that a Code violation has
occurred, or believes that a Code violation may have occurred,
the Review Officer must submit a written report regarding thee
possible violation, together with the confidential report and
any explanatory material provided by the person, to the
President and legal counsel ("Counsel") for the Fund. The
President and Counsel will determine whether the person
violated the Code.
(D) No person may participate in a determination of whether he
or she has committed a Code violation or of the imposition of
any sanction against himself or herself. If a securities
transaction of the President is under consideration, a Vice
President will act for the President for purposes of this
Section V. The Review Officer will submit his or her own
reports, as may be required pursuant to Parts A or B hereof,
to an Alternate Review Officer who shall fulfill the duties of
the Review Officer's with respect to the Review Officer's
reports.
(3) Sanctions.
If the President and Counsel determine that the person
violated the Code, the President will impose upon the person
any sanctions that the President deems appropriate and will
report the violation and any imposed sanctions to the Board of
Trustees at the next regularly scheduled board meeting unless,
in the sole discretion of the President, circumstances warrant
an earlier report. Sanctions may include suspension of
authority to act on behalf of a Fund as an officer or trustee,
or removal from office.
VI. Annual Written Reports To The Boards
At least annually, the Review Officer, the investment adviser(s) (including any
sub-advisers) and principle underwriter will provide written reports to the
Board of Trustees as follows:
(1) Issues Arising Under the Code. The reports must describe any issue(s)
that arose during the previous year under the codes or
procedures thereto, including any material code or procedural
violations, and any resulting sanction(s). The Review Officer,
President, investment adviser(s) (including any sub-advisers) and
principle underwriter(s) may report to the Board more frequently as
they deem necessary or appropriate and shall do so as requested by
the Board.
(2) Certification. Each report must be accompanied by a certification to the
Board that the Fund, investment adviser(s) (including any sub-advisers),
and principal underwriter(s) have adopted procedures reasonably necessary
to prevent their access persons from violating their code of ethics.
VII. Interrelationship With Other Codes Of Ethics
(1) General Principle: Overlapping Responsibilities. A person who
is both an access person of a Fund and an access person of an
investment adviser to or principal underwriter for the Fund is
only required to report under and otherwise comply with the
investment adviser's or principal underwriter's code of
ethics, provided that such code has been adopted pursuant to
and in compliance with Rule 17j-1. These access persons,
however, remain subject to the principles and prohibitions in
Section III and IV hereof.
(2) Procedures. Each such investment adviser and principal underwriter of
the Fund must:
(A) Submit to the Board of Trustees of the Fund a copy of its code of ethics
adopted pursuant to or in compliance with Rule 17j-1; (B) Promptly furnish to
the Fund, upon request, copies of any reports made under its code of ethics by
any person who is also covered by the Fund's Code; and
(C) Promptly report to the Fund in writing any material
amendments to its code of ethics, along with the
certification described under Section VI.(2). above.
VIII. Recordkeeping.
The Funds will maintain records as set forth below. These records will
be maintained in accordance with Rule 31a-2 under the 1940 Act and the following
requirements. They will be available for examination by representatives of the
Securities and Exchange Commission and other regulatory agencies.
(1) A copy of this Code and any other code adopted by the Funds, which is,
or at any time within the past five years has been, in
effect will be preserved in an easily accessible place;
(2) A record of any Code violation and of any sanctions taken will
be preserved in an easily accessible place for a period of at
least five years following the end of the fiscal year in which
the violation occurred;
(3) A copy of each Quarterly Transaction Report, Initial Holdings
Report, and Annual Holdings Report submitted under this Code,
including any information provided in lieu of any such reports
made under the Code (see Parts A and B for more information
about reporting), will be preserved for a period of at least
five years from the end of the fiscal year in which it is
made, for the first two years in an easily accessible place;
(4) A record of all persons, currently or within the past five
years, who are or were required to submit reports under this
Code, or who are or were responsible for reviewing these
reports, will be maintained in an easily accessible place; and
(5) A copy of each annual report required by Section VI of this
Code must be maintained for at least five years from the end
of the fiscal year in which it is made, for the first two
years in an easily accessible place.
IX. Miscellaneous.
(1) Confidentiality. All personal securities transactions reports
and any other information filed with a Fund under this Code
will be treated as confidential, provided that such reports
and information may be produced to the Securities and Exchange
Commission and other regulatory agencies.
(2) Interpretation of Provisions. The Boards of Trustees may from time to
time adopt such interpretations of this Code as appropriate.
(3) Periodic Review and Reporting. Each President will report to
its Board of Trustees at least annually as to the operation of
this Code and will address in any such report the need (if
any) for further changes or modifications to the Code.
Adopted:
Revised:
<PAGE>
PART A
Independent Trustees
I. QUARTERLY Transaction Reports.
(A) Subject to Section II.(B) below, each quarter, you must report
all of your securities transactions effected, as well as any
securities accounts you established, during the quarter. You
must submit your report to the Review Officer no later than 10
days after the end of each calendar quarter. A Quarterly
Personal Securities Transactions Report Form is included as
Appendix B.
(B) If you had no reportable transactions and did not open any
securities accounts during the quarter, you are still required
to submit a report. Please note on your report that you had no
reportable items during the quarter, and return it, signed and
dated.
II. WHAT MUST BE INCLUDED IN YOUR QUARTERLY REPORTS?
(A) You must report all transactions in securities that: (i) you
directly or indirectly beneficially own or (ii) because of the
transaction, you acquire direct or indirect beneficial
ownership. You must also report any account you established
during the quarter in which any securities were held for your
direct or indirect benefit.
(B) Notwithstanding Section I above, reports of individuals
securities transactions are required only if you knew at the
time of the transaction, or in the ordinary course of
fulfilling your official duties as a Trustee should have
known, that during the 15-day period immediately preceding or
following the date of your transaction, the same security was
purchased or sold, or was being considered for purchase or
sale, by the Fund (or any series thereof).
The "should have known" standard does not:
o imply a duty of inquiry;
o presume you should have deduced or extrapolated from discussions or
memoranda dealing with a Portfolio's investment strategies; or
o impute knowledge from your awareness of a Portfolio's
holdings, market considerations, or investment
policies, objectives and restrictions.
III. WHAT MAY BE EXCLUDED FROM YOUR QUARTERLY REPORTS?
You are not required to detail or list the following items on your
quarterly report:
(A) Purchases or sales effected for any account over which you
have no direct or indirect influence or control;
(B) Purchases you made solely with the dividend proceeds received
in a dividend reimbursement plan or that are part of an
automatic payroll deduction plan, where you purchased a
security issued by your employer;
(C) Purchases effected on the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
as long as you acquired these rights from the issuer, and
sales of such rights;
(D) Purchases or sales which are non-volitional, including
purchases or sales upon the exercise of written puts or calls
and sales from a margin account pursuant to a bona fide margin
call; and
(E) Purchases or sales of any of the following securities:
o Direct obligations of the U.S. government;
o Banker's acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt
instruments, including repurchase agreements; and
o Shares issued by registered, open-end investment companies.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect beneficial
ownership in the security included in the report.
<PAGE>
PART B
Interested Trustees, Fund Officers and Natural Control Persons
I. REQUIRED REPORTS
(A) Initial Holdings Report.
You must submit a listing of all securities you beneficially
own, as well as all of your securities accounts, as of the
date you first become subject to this Code's reporting
requirements. You must submit this list to the Review Officer
within 10 days of the date you first become subject to this
Code's reporting requirements. An Initial Holdings Report Form
is attached as Appendix D.
(B) Annual Holdings Reports.
Each year, you must submit to the Review Officer a listing of
all securities you beneficially own, as well as all of your
securities accounts. Your list must be current as of a date no
more than 30 days before you submit the report. An Annual
Holdings Report Form is attached as Appendix E.
(C) Quarterly Transaction Reports.
(1) Each quarter, you must report all of your securities
transactions effected, as well as any securities
accounts you established, during the quarter. You
must submit your report to the Review Officer no
later than 10 days after the end of each calendar
quarter. A Quarter Personal Securities Transactions
Report Form is attached as Appendix B.
(2) If you had no reputable transactions and did not own
any securities accounts during the quarter, you are
still required to submit a report. Please note on
your report that you had no reportable items during
the quarter, and return it, signed and dated.
II. WHAT MUST BE INCLUDED IN YOUR REPORTS?
You must report all transactions in securities that: (i) you directly
or indirectly beneficially own; or (ii) because of the transaction, you
acquire direct or indirect beneficial ownership. You must also report
all of your accounts in which any securities were held for your direct
or indirect benefit.
III. WHAT MAY BE EXCLUDED FROM YOUR REPORTS?
You are not required to detail or list the following items on your
reports:
(A) Purchases or sales effected for any account over which you
have no direct or indirect influence or control;
(B) Purchases you made solely with the dividend proceeds received
in a dividend reinvestment plan or that are part of an
automatic payroll deduction plan, where you purchased a
security issued by your employer;
(C) Purchases effected on the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
as long as you acquired these rights from the issuer, and
sales of such rights;
(D) Purchases or sales which are non-volitional, including
purchases or sales upon the exercise of written puts or calls
and sales from a margin account pursuant to a bona fide margin
call; and
(E) Purchases or sales of any of the following securities:
o Direct obligations of the U.S. government;
o Banker's acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt
instruments, including repurchase agreements; and
o Shares issued by registered, open-end investment companies.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect
beneficial ownership in the security included in the report.
IV. PRE-APPROVAL OF IPOs AND LIMITED OFFERINGS FOR NATURAL CONTROL PERSONS
Natural control persons must obtain approval from the Review Officer
before directly or indirectly acquiring beneficial ownership of any
securities in an IPO or limited offering. The Review Officer will
create a written report detailing any approvals granted for such an
acquisition, including the rationale supporting the decision. These
records will be maintained for at least five years after the end of the
fiscal year in which the approval is granted.
<PAGE>
APPENDIX A
Definitions
General Note
The definitions and terms used in this Code of Ethics
are intended to mean the same as they do under the 1940 Act
and the other federal securities laws. If a definition
hereunder conflicts
with the definition in the 1940 Act or other federal
securities laws, or if a term used in this Code
is not defined, you should follow the
definitions and meanings in the
1940 Act or other federal securities laws, as applicable.
Beneficial ownership means the same as it does under Section 16 of the
Securities Exchange Act of 1934 and Rule 16a-1(a)(2) thereunder. You should
generally consider yourself the "beneficial owner" of any securities in which
you have a direct or indirect pecuniary interest. In addition, you should
consider yourself the beneficial owner of securities held by your spouse, your
minor children, a relative who shares your home, or other persons by reason of
any contract, arrangement, understanding or relationship that provides you with
sole or shared voting or investment power.
Control means the same as that under in Section 2(a)(9) of the 1940 Act. Section
2(a)(9) provides that "control" means the power to exercise a controlling
influence over the management or policies of a company, unless such power is
solely the result of an official position with such company. Ownership of 25% or
more of a company's outstanding voting security is presumed to give the holder
thereof control over the company. This presumption may be countered by the facts
and circumstances of a given situation.
High quality short-term debt instrument means any instrument that has a maturity
at issuance of less than 366 days and that is rated in one of the two highest
rating categories by a nationally recognized statistical rating organization
(e.g., Moody's Investors Service). Independent trustee means a trustee of a Fund
who is not an "interested person" of the Fund within the meaning of Section
2(a)(19) of the 1940 Act.
IPO (i.e., initial public offering) means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately before
registration, was not subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934.
Interested trustee means a trustee of a Fund who is an "interested person" of
the Fund within the meaning of Section 2(a)(19) of the 1940 Act.
Limited offering means an offering that is exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2), Section 4(6), Rule 504, Rule
505 or Rule 506 (e.g., private placements).
Purchase or sale of a security includes, among other things, the writing of an
option to purchase or sell a security.
Security means the same as it does under Section 2(a)(36) of the 1940 Act,
except that it does not include direct obligations of the U.S. government,
bankers' acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments, including repurchase agreements, or shares
issued by registered, open-end investment companies.
A security held or to be acquired by a Fund (or any Portfolio) means: (A) any
security which, within the most recent 15 days (i) is or has been held by the
Fund (or any Portfolio), or (ii) is being or has been considered by the Fund's
adviser or sub-adviser for purchase by the Fund (or any Portfolio); and (B) any
option to purchase or sell, and any security convertible into or exchangeable
for, any security.
A security is being purchased or sold by the Fund (or any Portfolio) from the
time a purchase or sale program has been communicated to the person who places
buy and sell orders for the Fund (or Portfolio) until the program has been fully
completed or terminated.
A security is being considered for purchase or sale for a Fund when a security
is identified as such by an investment adviser to the Fund.
<PAGE>
<TABLE>
<S> <C> <C>
APPENDIX B
QUARTERLY PERSONAL SECURITIES TRANSACTIONS REPORT
Name of Reporting Person:
----------------------------------------
----------------------------------------
Calendar Quarter Ended:
------------------------------------- ----------------------------------------
----------------------------------------
Date Report Due:
------------------------------------- ----------------------------------------
----------------------------------------
Date Report Submitted:
------------------------------------- ----------------------------------------
Securities Transactions
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
Principal Amount,
Maturity Date and Name of Broker,
Name of Issuer Interest Rate (if Dealer or Bank
and Title of No. of applicable) Effecting
Date of Security Shares (if Type of Transaction
Transaction applicable) Transaction Price
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
</TABLE>
If you had no securities transactions to report for the quarter, please check
here.
If you do not want this report to be construed as an admission that you have
beneficial ownership of one or more securities listed above, please describe
below and indicate which securities are at issue:
--------------------------------------------------------------------------------
Securities Accounts
If you established a securities account during the quarter, please provide the
following information:
<TABLE>
<S> <C> <C>
---------------------------------------- --------------------------------------- ---------------------------------------
Name of Broker, Dealer or Bank Date Account was Established Name(s) on and Type of Account
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
If you did not establish any securities accounts during the quarter, please check here.
I certify that I have included in this report all securities transactions and
accounts required to be reported pursuant to the Code of Ethics.
-------------------- ----------------
Signature Date
<PAGE>
APPENDIX C
QUARTERLY PERSONAL SECURITIES TRANSACTIONS REPORT
Name of Reporting Person:
----------------------------------------
----------------------------------------
Calendar Quarter Ended:
------------------------------------- ----------------------------------------
----------------------------------------
Date Report Due:
------------------------------------- ----------------------------------------
----------------------------------------
Date Report Submitted:
------------------------------------- ----------------------------------------
Securities Transactions
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
Principal Amount,
Maturity Date and Name of Broker,
Name of Issuer Interest Rate (if Dealer or Bank
and Title of No. of applicable) Effecting
Date of Security Shares (if Type of Transaction
Transaction applicable) Transaction Price
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
------------------ ---------------- ---------------- ------------------- ------------------- --------- -----------------
If you had no securities transactions to report for the quarter, please check here.
If you do not want this report to be construed as an admission that you have
beneficial ownership of one or more securities reported above, please describe
below and indicate which securities are at issue:
Securities Accounts
If you established a securities account during the quarter, please provide the
following information:
---------------------------------------- --------------------------------------- ---------------------------------------
Name of Broker, Dealer or Bank Date Account was Established Name(s) on and Type of Account
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
---------------------------------------- --------------------------------------- ---------------------------------------
If you did not establish any securities accounts during the quarter, please check here.
I certify that I have included in this report all securities transactions and
accounts required to be reported pursuant to the Code of Ethics.
-------------------- ----------------
Signature Date
<PAGE>
APPENDIX D
INITIAL HOLDINGS REPORT
Name of Reporting Person:
----------------------------------------
----------------------------------------
Date Person Became Subject to the Code's
Reporting Requirements:
----------------------------------------
----------------------------------------
Information in Report Dated As Of: [Note: Date person became
subject and as of date should be
the same.]
----------------------------------------
----------------------------------------
Date Report Due:
----------------------------------------
----------------------------------------
Date Report Submitted:
----------------------------------------
Securities Transactions
---------------------------------------- ---------------------- ----------------------------------------------------------
Name of Issuer and No. of Shares Principal Amount, Maturity Date and Interest Rate
Title of Security (if applicable) (if applicable)
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
If you have no securities holdings to report, please check here.
If you do not want this report to be considered as an admission that you have
beneficial ownership of one or more securities listed above, please describe
below and indicate which securities are at issue:
Securities Accounts
-------------------------------------------------- -----------------------------------------------
Name of Broker, Dealer or Bank Name(s) on and Type of Account
-------------------------------------------------- -----------------------------------------------
-------------------------------------------------- -----------------------------------------------
-------------------------------------------------- -----------------------------------------------
-------------------------------------------------- -----------------------------------------------
-------------------------------------------------- -----------------------------------------------
-------------------------------------------------- -----------------------------------------------
-------------------------------------------------- -----------------------------------------------
-------------------------------------------------- -----------------------------------------------
-------------------------------------------------- -----------------------------------------------
If you have no securities accounts to report, please check here.
I certify that I have included on this report all securities holdings and
accounts required to be reported pursuant to the Code of Ethics.
--------------------- --------------
Signature Date
<PAGE>
APPENDIX E
ANNUAL HOLDINGS REPORT
Name of Reporting Person:
Information in Report Dated As Of: [Note: Information should be
dated no more than 30 days
before report is submitted.]
----------------------------------------
----------------------------------------
Date Report Due:
----------------------------------------
----------------------------------------
Date Report Submitted:
----------------------------------------
Calendar Year Ended: December 31, __
Securities Transactions
---------------------------------------- ---------------------- ----------------------------------------------------------
Name of Issuer and No. of Shares Principal Amount, Maturity Date and Interest Rate
Title of Security (if applicable) (if applicable)
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
---------------------------------------- ---------------------- ----------------------------------------------------------
If you have no securities holdings to report, please check here.
If you do not want this report to be considered as an admission that you have
beneficial ownership of one or more securities reported above, please describe
below and indicate which securities are at issue.
Securities Accounts
-------------------------------------------------- -------------------------- ----------------------------------------------
Name of Broker, Dealer or Bank Date Account was Name(s) on and Type of Account
Established
-------------------------------------------------- -------------------------- ----------------------------------------------
-------------------------------------------------- -------------------------- ----------------------------------------------
-------------------------------------------------- -------------------------- ----------------------------------------------
-------------------------------------------------- -------------------------- ----------------------------------------------
-------------------------------------------------- -------------------------- ----------------------------------------------
-------------------------------------------------- -------------------------- ----------------------------------------------
-------------------------------------------------- -------------------------- ----------------------------------------------
If you have no securities accounts to report, please check here.
I certify that I have included on this report all securities holdings and
accounts required to be reported pursuant to the Code of Ethics.
--------------------- --------------
Signature Date
</TABLE>
<PAGE>
1
APPENDIX F
COMPLIANCE CERTIFICATION
<TABLE>
<S> <C> <C>
Initial Certification
I certify that I: (i) have received, read and reviewed the Joint Code of Ethics of the Wells Fargo Funds;
(ii) understand the policies and procedures in the Code;
(iii) recognize that I am subject to such policies and procedures;
(iv) understand the penalties for non-compliance;
(v) will fully comply with the Code of Ethics; and
(vi) have fully and accurately completed this Certificate.
Signature:
-----------------------------------------------------------------
Name: (Please print)
-----------------------------------------------------------------
Date Submitted:
-----------------------------------------------------------------
Date Due:
-----------------------------------------------------------------
---------------------------- ----------------------------------------------------------------- ----------------------------------
Annual Certification
I certify that I: (i) have received, read and reviewed the Joint Code of Ethics of the Wells Fargo Funds;
(ii) understand the policies and procedures in the Code;
(iii) recognize that I am subject to such policies and procedures;
(iv) understand the penalties for non-compliance;
(v) have completed with the Code of Ethics and any related procedures;
(vi) have fully disclosed any exceptions to my compliance with the Code;
(vii) will fully comply with the Code of Ethics; and
(viii) have fully and accurately completed this Certificate.
EXCEPTION(S):
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Signature:
-----------------------------------------------------------------
Name: (Please print)
-----------------------------------------------------------------
Date Submitted:
-----------------------------------------------------------------
Date Due:
</TABLE>
<PAGE>
EX-99.B(p)(2)
WELLS FARGO BANK
CODE OF ETHICS
Adopted Under Rule 17j-1
Effective July 12, 2000
Wells Fargo Bank (the Bank) is confident that its officers, directors and
employees act with integrity and good faith. The Bank recognizes, however, that
personal interests may conflict with those of the investment companies it
advises where its officers, directors or employees:
o Know about present or future portfolio transactions, or
o Have the power to influence portfolio transactions; and
o Engage in personal transactions in securities.
In an effort to prevent these conflicts and in accordance with Rule 17j-1 under
the Investment Company Act of 1940 (the 1940 Act), the Bank has adopted this
Code of Ethics (the Code) to prohibit transactions that create or may create
conflicts of interest, and to establish reporting requirements and enforcement
procedures.
I. About the Bank
The Bank is a national bank that is primarily engaged in traditional
banking activities and other financial services. The Bank also serves
as investment adviser to various investment companies registered under
the 1940 Act. As an investment adviser to the registered investment
companies, the Bank is required to adopt a code of ethics under Rule
17j-1. Rule 17j-1 requires all investment advisers for registered
investment companies to adopt a code of ethics, but permits advisers
that, like the Bank, are "primarily engaged in a business or businesses
other than advising [registered investment companies] or other advisory
clients " to adopt codes that govern a more narrow universe of "access
persons."1 The Bank has adopted this Code to comply with the
requirements under Rule 17j-1 for such investment advisers.
II. About this Code of Ethics.
The Code sets forth general prohibitions and requirements, which are
included under Section IV (Statement of General Principles) and Section
V (Prohibitions Regarding Conduct of Covered Persons). This Code also
sets forth reporting obligations and specific prohibitions on
securities transactions, which are included under Section VI (Reporting
Obligations of Advisory Persons) and Section VII (Prohibitions
Regarding Securities Transactions by Advisory Persons). The remainder
of the Code sets forth review, enforcement, recordkeeping
responsibilities (Sections IX and X), and miscellaneous information
(Section XI). Underlined terms are defined in the Glossary.
NOTE: Persons covered by this Code are also subject to and required
to comply with the Bank's Code of Ethics and Business Conduct,
including the limitations therein regarding directorships and
the receipt of gifts.
III. Who is Covered by the Code of Ethics?
(a) Bank Officers, Directors and Employees.
This Code of Ethics applies to each officer, director and
employee of the Bank:
o who, with respect to any registered investment
company advised by the Bank (a Fund), makes any
recommendation, participates in the determination of
which recommendation will be made, or whose principal
function or duties relate to the determination of
which recommendation will be made by the Bank to any
Fund OR
o who, in connection with his or her duties, obtains
any information about securities recommendations
being made by the Bank to any Fund.
Throughout this Code, these persons are referred to as "Advisory
Persons." Currently, the Bank does not have any Advisory Persons. The
Bank has appointed sub-advisers to manage each Fund's assets on a
discretionary basis. Thus, the sub-advisers, rather than the Bank, make
recommendations to the Funds regarding purchases and sales of
securities. As a result, the Bank itself neither manages the Funds'
assets on a discretionary basis and nor make any securities
recommendations to the Funds.
(b) Limited Purpose Advisory Persons.
Although the Bank currently does not have any Advisory Persons, the
Bank recognizes that certain of its officers and employees may from
time to time obtain information regarding a security being purchased or
sold or being considered for purchase by a Fund. For purposes of this
Code, these officers and employees are called Limited Purpose Advisory
Persons. Specifically, you are a Limited Purpose Advisory Person if
you: are a Bank officer or employee; do not meet the definition of an
Advisory Person; are not covered by a code of ethics adopted by a
Fund's sub-adviser pursuant to Rule 17j-1; and obtaining information
from time to time regarding securities being purchased or sold or being
considered for purchase by a Fund while performing your regular
functions for the Bank.
The Review Officer, as defined below, will maintain a list of Limited
Purpose Advisory Persons and will notify such persons of their
obligations under this Code. The personal trading activities of Limited
Purpose Advisory Persons are addressed in Section VIII below.
(c) Covered Persons.
Throughout the Code, Advisory Persons and Limited Purpose Advisory
Persons are collectively referred to as "Covered Persons."
IV. Statement of General Principles.
In recognition of the trust and confidence placed in the Bank by the
Funds and their shareholders, and because the Bank believes that its
operations should benefit the Funds and their shareholders, the Bank
has adopted the following general principles to guide its Covered
Persons.
(a) The Funds' and their shareholders' interests are paramount.
You must place their interests before your own.
(b) You must accomplish all personal securities transactions in a
manner that avoids a conflict of your personal interests with
those of the Funds or their shareholders.
(c) You must avoid actions or activities that allow you or your
family to profit or benefit from your relationship with a
Fund, or that bring into question your independence or
judgment.
V. Prohibition Against Fraud, Deceit and Manipulation.
No Covered Person in connection with the purchase or sale, directly or
indirectly, of a security held or to be acquired by any Fund may:
(a) employ any device, scheme or artifice to defraud any Fund;
(b) make to a Fund any untrue statement of a material fact or omit
to state to a Fund a material fact necessary in order to make
the statements made, in light of the circumstances under which
they are made, not misleading;
(c) engage in any act, practice or course of business which would
operate as a fraud or deceit upon any Fund; or
(d) engage in any manipulative practice with respect to any Fund.
VI. Reporting Obligations of Advisory Persons.
(a) Initial and Annual Reports of Securities Holdings and Accounts.
You must provide the Review Officer with a complete listing of
all securities you beneficially own and all your securities
accounts as of the date you first become subject to this
Code's reporting requirements. You must submit this list to
the Review Officer, as defined below, within 10 days of the
date you first become subject to this Code's reporting
requirements. Each following year, you must submit a revised
list to the Review Officer as of a date no more than 30 days
before you submit the list. An Initial and Annual Report of
Securities Holdings and Accounts is included as Appendix A.
(b) Quarterly Reports.
Each quarter, you must report all securities transactions
effected, as well as securities accounts you established,
during the quarter. You must submit your report to the Review
Officer no later than 10 days after the end of each calendar
quarter. A Quarterly Report is included as Appendix B.
If you had no reportable transactions and did not open any
securities accounts during the quarter, you are still required
to submit a report. Please note in the spaces provided on the
report that you had no reportable items during the quarter,
and return it, signed and dated.
(c) What Must Be Included in Your Reports?
You must report all transactions in securities that: (i) you
directly or indirectly beneficially own or (ii) because of the
transaction, you acquire direct or indirect beneficial
ownership. You also must report all of your accounts in which
any securities were held for your direct or indirect benefit
(e.g., brokerage accounts, certain bank accounts).
(d) What May Be Excluded from Your Reports?
You are not required to include the following securities,
transactions or accounts on your reports:
(1) Purchases or sales effected for any account over
which you have no direct or indirect influence or control;
(2) Purchases you made solely with the dividend proceeds
received in a dividend reinvestment plan or that are
part of an automatic payroll deduction plan, where
you purchased a security issued by your employer;
(3) Purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of
its securities, as long as you acquired these rights
from the issuer, and sales of such rights;
(4) Purchases or sale that are non-volitional, including
purchases or sales upon exercise of written puts or
calls, and sales from a margin account to a bona fide
margin call;
(5) Purchases of direct obligations of the U.S.
Government, bankers' acceptances, bank certificates
of deposit, commercial paper, high quality short-term
debt instruments, including repurchase agreements,
and shares issued by registered, open-end investment
companies.
As indicated on the reports, you may include a statement in your report
that the report shall not be construed as your admission that you have
any direct or indirect beneficial ownership in a security included in
the report.
(e) Duplicate Broker Confirmations.
You must direct your broker to send the Review Officer (as
defined below) on a timely basis duplicate copies of
confirmations of all personal securities transactions and
copies of periodic statements. This includes confirmations and
statements for transactions in Fund shares.
(f) Initial and Annual Certification of Compliance with the Code
of Ethics.
Within 10 days of becoming an Advisory Person, and each year
thereafter, you must complete the Certification Form, included
as Appendix C.
VII. Prohibitions Regarding Securities Transactions by Advisory
Persons.
(a) Initial Public Offerings.
You cannot acquire any securities in an initial public
offering.
(b) Limited Offerings.
You cannot acquire any securities in a limited offering
(e.g., private placement).
(c) Blackout Periods on Personal Securities Transactions.
(1) You cannot purchase or sell, directly or indirectly,
a security in which you had (or by reason of the
transaction acquire) any beneficial ownership on a
day that any Fund has an unexpected buy or sell order
in the same (or a related) security until the Funds
order is executed or withdrawn.
(2) You cannot purchase or sell, directly or indirectly,
any security in which you had (or by reason of such
transaction acquire) any beneficial ownership at any
time within 7 calendar days before or after the time
that the same (or a related) security is being
purchased or sold by any Fund that you manage or for
which you trade.
(3) You cannot purchase or sell, directly or indirectly,
any security in which you had (or by reason of the
transaction acquire) any beneficial ownership at any
time within 7 calendar days before or after you have
issued an investment recommendation regarding that
(or a related) security.
(d) Ban on Short-Term Trading Profits.
You cannot profit from buying and selling, or selling and
buying, the same security (or its equivalent) within 60
calendar days. For purpose of counting the 60 days, multiple
transactions in the same security will be counted in such a
manner as to produce the shortest time period between
transactions.
This prohibition includes short sales. Exercised options are
excluded, but profitable purchases and sales of options
occurring within 60 days are prohibited. Sales at original
purchase price or at a loss are not prohibited. All other
exceptions require the advance written approval from the
Review Officer (as defined below).
VIII. Limited Purpose Advisory Persons.
As a Limited Purpose Advisory Person, you must comply with the certification
requirement in Section VI.(f) above. You also must comply with the prohibitions
described below, but only with respect to those securities about which you
obtain information regarding a security being purchased or sold by a Fund or
being considered for purchase by a Fund while performing your regular Bank
functions.
(a) Blackout Period on Personal Securities Transactions.
If you obtain information regarding a security being purchased
or sold by a Fund or being considered for purchase by a Fund,
you cannot purchase or sell, directly or indirectly, that
security (or by reason of the transaction acquire any
beneficial ownership in that security) while such security is
being purchased or sold or is being considered for purchase by
a Fund. Further, you cannot purchase or sell that security (or
by reason of the transaction acquire any beneficial ownership
in that security) at any time during the 7 calendar days after
the same (or a related) was purchased or sold by a Fund.
(b) Ban on Short-Term Trading Profits.
If you obtain information regarding a security being purchased
or sold by a Fund or being considered for purchase by a Fund,
you cannot profit from buying and selling, or selling and
buying, the same security (or its equivalent) within 60
calendar days. This includes short sales. Exercised options
are excluded, but profitable purchases and sales of options
occurring within 60 days are prohibited. Sales at original
purchase price or at a loss are not prohibited. All other
exceptions require the advance written approval from the
Review Officer (as defined below).
IX. Review and Enforcement of the Code.
(a) Appointment of a Review Officer.
A review officer (the Review Officer) will perform the duties
described below. The Review Officer is Ms. Dorothy Peters.
(b) The Review Officer's Duties and Responsibilities.
(1) The Review Officer will identify each person who is
covered by this Code, as well as each person who is
required to report under the Code. The Review Officer
will inform each person of his or her status under
the Code and applicable reporting and other
requirements no later than 10 days before the first
quarter in which he or she is obligated to begin
reporting.
(2) The Review Officer will, on a quarterly basis,
compare reported personal securities transactions
with each Fund's completed portfolio transactions
during the quarter covered by the reports to
determine whether a Code violation may have occurred.
The Review Officer also will compare reported
personal securities transactions with a list of
securities that were considered for purchase by the
Fund during the quarter covered by the reports, and
otherwise review the personal securities transactions
to determine whether a Code violation may have
occurred. The Review Officer may request additional
information or take any other appropriate measure
that the Review Officer decides is necessary to aid
in this determination.
(3) Before determining that a person has violated the
Code, the Review Officer must give the person an
opportunity to supply explanatory material. No person
is required to participate in a determination of
whether he or she has committed a Code violation or
of the imposition of any sanction against himself or
herself.
(4) If required, the Review Officer will submit his or
her own reports to an Alternate Review Officer who
will fulfill the duties of the Review Officer with
respect to such reports. If a securities transaction
of the Review Officer is under review for a possible
violation, an officer of the Bank will act for the
Alternate Review Officer for purposes of this Section
IX.
(c) Sanctions.
If the Review Officer finds that a person violated the Code,
the Review Officer may: (i) impose upon the person a notice or
notices of censure; (ii) notify appropriate Bank personnel for
further action; and/or (iii) recommend specific sanctions to
appropriate Bank personnel, such as suspension for one week or
more without pay, reductions in leave, elimination of
[discretionary] bonuses and similar payments, disgorgement of
profits, dismissal and referral to authorities.
X. Recordkeeping.
The Bank will maintain records as set forth below, which will be made
available for examination by representatives of the Securities and
Exchange Commission and other regulatory entities.
(a) A copy of this Code and any other code of the Bank, which is,
or at any time within the past five years has been, in effect
will be preserved in an easily accessible place.
(b) A record of any Code violation and of any sanctions taken will
be preserved in an easily accessible place for a period of at
least five years following the end of the fiscal year in which
the violation occurred.
(c) A copy of each report submitted under this Code will be
preserved for a period of at least five years from the end of
the fiscal year in which it is made, for the first two years
in an easily accessible place.
(d) A record of all persons, currently or within the past five
years, who are or were required to submit reports under this
Code, and a list of those persons who are or were responsible
for reviewing these reports, will be maintained in an easily
accessible place.
(e) A copy of each annual issues and certification report, as
required by Section XI.(c) of this Code, must be maintained
for at least five years from the end of the fiscal year in
which it is made, for the first two years in any easily
accessible place.
XI. Miscellaneous.
(a) Confidentiality. All reports and other information submitted
to the Bank pursuant to this Code will be treated as
confidential, provided that such reports and information may
be produced to the Securities and Exchange Commission and
other regulatory authorities.
(b) Interpretation of Provisions. The Bank may from time to time
adopt such interpretations of this Code as appropriate.
(c) Annual Issues and Certification Report. At least once a
year, the Review Officer will provide each Fund with a written
report that:
(1) describes issues that arose during the previous year
under the Code or procedures thereto, including any
material Code or procedural violations, and any
resulting sanctions; and
(2) certifies to the Fund's board of directors or
trustees that the Bank has adopted procedures
necessary to prevent any of its access persons, as
defined under Rule 17j-1, from violating the Code.
Adopted: ___________________, 2000
<PAGE>
GLOSSARY
Beneficial ownership means the same as it does under Section 16 of the
Securities Exchange Act of 1934. You should generally consider yourself the
beneficial owner of any securities in which you have a direct or indirect
pecuniary interest. In addition, you should consider yourself the beneficial
owner of securities held by your spouse, your minor children, a relative who
shares your home, or other persons by reason of any contract, arrangement,
understanding or relationship that provides you with sole or shared voting or
investment power.
High quality short-term debt instrument means any instrument that has a maturity
at issuance of less than 366 days and that is rated in one of the two highest
rating categories by a nationally recognized statistical rating organization
(e.g., Moody's Investors Service).
Initial public offering means an offering of securities registered under the
Securities Act of 1933, the issuer of which, immediately before registration,
was not subject to the reporting requirements of Section 13 or Section 15(d) of
the Securities Exchange Act of 1934.
Limited offering means an offering that is exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2), Section 4(6), Rule 504, Rule
505 or Rule 506.
Purchase or sale of a security includes, among other things, the writing of an
option to purchase or sell a security.
Security means the same as that set forth in Section 2(a)(36) of the 1940 Act,
except that it does not include direct obligations of the U.S. Government,
bankers' acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments, including repurchase agreements, and shares
issued by registered, open-end mutual funds.
A security held or to be acquired by a Fund means (A) any security that, within
the most recent 15 days (i) is or has been held by the Fund, or (ii) is being or
has been considered by the Fund's adviser or subadviser for purchase by the
Fund, and (B) any option to purchase or sell, and any security convertible into
or exchangeable for, any security.
A security is being purchased or sold by a Fund from the time a purchase or sale
program has been communicated to the person who places buy and sell orders for
the Fund until the program has been fully completed or terminated.
A security is being considered for purchase by a Fund when a security is
identified as such by the Fund's adviser or sub-adviser.
<PAGE>
APPENDIX A
Initial and Annual Report of Securities Holdings and Accounts
Name of Reporting Person: ______________________
Date Person Became Subject to the Code's Reporting Requirements: _____________
Information in Report Dated As Of: _________________
Date Report Due: _________________
Date Report Submitted: _______________
If this is your first list of securities holdings and accounts, please check
here. 9 If this is an annual report, calendar year ended: __________________
<TABLE>
<S> <C> <C>
Securities Holdings
---------------------------------------- -------------------------------- --------------------------------------------
Name of Issuer Title of Security Number of Shares, Principal Amount,
Interest Rate and Maturity Date
(as applicable)
---------------------------------------- -------------------------------- --------------------------------------------
---------------------------------------- -------------------------------- --------------------------------------------
---------------------------------------- -------------------------------- --------------------------------------------
---------------------------------------- -------------------------------- --------------------------------------------
---------------------------------------- -------------------------------- --------------------------------------------
---------------------------------------- -------------------------------- --------------------------------------------
---------------------------------------- -------------------------------- --------------------------------------------
---------------------------------------- -------------------------------- --------------------------------------------
---------------------------------------- -------------------------------- --------------------------------------------
If you have no securities holdings to report, please check here. 9
If you do not want this report to be considered as an admission that you have
beneficial ownership of one or more securities listed above, please describe
below and indicate which securities are at issue:
Securities Accounts
---------------------------------------- ---------------------------------------- ------------------------------------
Name of Broker, Dealer or Bank Name(s) on and Type of Account Date Account Established
(for annual reports only)
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
</TABLE>
If you have no securities accounts to report, please check here. 9
I certify that I have included on this report all securities holdings and
accounts required to be reported pursuant to the Wells Fargo Bank Code of
Ethics.
--------------------- --------------
Signature Date
<PAGE>
APPENDIX B
Quarterly Report
Name of Reporting Person: _____________________
Calendar Quarter Ended: _______________________
Date Report Due: ___________ 10,200 __________
Date Report Submitted: _______________________
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Securities Transactions
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
No. of Shares
Name Principal Amt.,
of Date of Title of Interest Rate, Type of Name of Broker, Dealer or
Issuer Transaction Security Maturity Date Transaction Price Banking Effecting
(as applicable) Transaction
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
-------------- -------------- ----------- ------------------- -------------- --------- -------------------------------
If you had no reportable securities transactions during the quarter, please check here. 9
If you do not want this report to be considered as an admission that you have
beneficial ownership of one or more securities listed above, please describe
below and indicate which securities are at issue:
Securities Accounts
---------------------------------------- ---------------------------------------- ------------------------------------
Name of Broker, Dealer or Bank Name(s) on and Type of Account Date Account was Established
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
---------------------------------------- ---------------------------------------- ------------------------------------
</TABLE>
If you did not establish any securities accounts during the quarter, please
check here. 9
I certify that I have included on this report all securities transactions and
accounts required to be reported pursuant to the Wells Fargo Bank Code of
Ethics.
-------------------- ----------------
Signature Date
<PAGE>
APPENDIX C
Certification Form
TO: Review Officer
FROM: ___________________
DUE DATE: ___________________
RE: Wells Fargo Bank Code of Ethics Certification
------------------------------------------------------------------------------
Initial Certification
I CERTIFY THAT (1) I HAVE READ AND UNDERSTAND THE WELLS FARGO BANK CODE OF
ETHICS, (2) I AM AWARE THAT I AM SUBJECT TO THE PROVISIONS OF THIS CODE, AND (3)
I WILL FULLY COMPLY WITH THIS CODE.
Name (print): _________________________
Position: _________________________
Signature: _________________________
Date: _________________________
------------------------------------------------------------------------------
Annual Certification
I CERTIFY THAT (1) I HAVE READ AND UNDERSTAND THE WELLS FARGO BANK CODE OF
ETHICS, (2) I AM AWARE THAT I AM SUBJECT TO THE PROVISIONS OF THIS CODE, (3) I
HAVE COMPLIED WITH THIS CODE AT ALL TIMES DURING THE PREVIOUS CALENDAR YEAR, (4)
I HAVE, DURING THE PREVIOUS CALENDAR YEAR, REPORTED ANY AND ALL SECURITIES
HOLDINGS, TRANSACTIONS AND ACCOUNTS THAT I AM REQUIRED TO REPORT PURSUANT TO THE
CODE, AND (5) I WILL FULLY COMPLY WITH THE CODE.
Name (print): _________________________
Position: _________________________
Signature: _________________________
Date: _________________________
<PAGE>
5
EX-99.B(p)(5)
Galliard Capital Management, Inc.
Code of Ethics
Adopted Pursuant to Rule 204-2 of the
Investment Advisers Act of 1940 and
Rule 17j-1 of the Investment Company
Act of 1940
INTRODUCTION
This Code of Ethics has been adopted by Galliard Capital Management,
Inc. ("Galliard"), a registered investment adviser, in connection with
investment advisory services it provides to its clients, including certain of
the investment portfolios of registered investment companies (each a "Fund") and
various other institutional accounts (together, "Customer Accounts"). For the
purpose of this Code, all Galliard Employees are considered "access persons" as
defined in the Investment Company Act of 1940 and therefore any requirements
that apply to "access persons" under this Code relative to any Fund advised by
Galliard apply to all Galliard Employees.
This Code contains standards and procedures intended to assure that
Employees of Galliard do not use any information concerning the investments or
investment intentions of a Customer Account or their ability to influence such
investment intentions for personal gain or in a manner detrimental to the
interests of a Customer Account.
All Employees of Galliard, which is a wholly owned subsidiary of Wells
Fargo & Company, must also comply with the Wells Fargo Code of Ethics and Wells
Fargo Insider Trading Policy as outlined in the Wells Fargo Employee Handbook.
The Code of Ethics Procedures, and forms for transaction pre-approval
and reporting requirements are incorporated into this Code of Ethics and
attached as Appendix A.
SECTION 1. PROHIBITED TRANSACTIONS
(a) Securities Transactions. No Employee may purchase any Security held
in a Fund or other Customer Account advised by Galliard.
(b) Undue Influence; Disclosure of Personal Interest. No Employee shall
cause or attempt to cause any Customer Account to purchase, sell or
hold any Security in a manner calculated to create any personal
benefit to the Employee. No Employee shall recommend any Securities
transactions for a Customer Account without having disclosed his or
her interest, if any, in such Securities or the issuer thereof,
including, without limitation:
(i) his or her direct or indirect beneficial ownership of any
Securities of such issuer,
(ii) any position with such issuer or its affiliates, and
(iii) any present or proposed business relationship between such
issuer or its affiliates and the Employee or any party in
which the Employee has a significant interest.
For the purposes of (b)(i) above, "beneficial ownership" means the same as it
does under Section 16 of the Securities Exchange Act of 1934 and Rule
16a-1(a)(2) thereunder, which includes any securities in which an Employee has a
direct or indirect pecuniary interest. In addition, Employees are considered
beneficial owner of any securities held by their spouse, minor children, a
relative who shares their home, or other persons by reason of any contract,
arrangement, understanding or relationship that provides Employee with sole or
shared voting or investment power.
(c) Investment Opportunities. All Employees are expressly prohibited
from taking personal advantage of any investment opportunity which
is eligible for a Customer Account. Compliance Manager will closely
review any personal transactions which might be eligible for a
Customer Account but are otherwise "not under consideration" as
defined by the Code for a conflict of interest.
(d) Confidentiality. Except as required in the normal course of
carrying out an Employee's business responsibilities, Employees are
prohibited from revealing information relating to the investment
intentions or activities of any Customer Account or otherwise
identifying Securities that are being considered for purchase or
sale on behalf of any Customer Account.
SECTION 2. PRE-APPROVAL OF SECURITIES TRANSACTIONS
(a) Every Employee must obtain written pre-approval from the Compliance Manager,
for any proposed purchase or sale of a taxable, fixed income security, any
initial public offering (IPO) of any type of security, or for any private
placement transaction (PPT) for any type of security for an account in which the
Employee has a direct or indirect beneficial ownership. A form for the purpose
of obtaining pre-approval is included in Appendix A.
(b) Pre-approval is not required for other transactions including, but not
limited to, the following transactions:
(i) purchases or sales of equity or equity-related securities or
tax-exempt municipal bond issues except IPO's and PPT's as outlined above;
(ii) purchases or sales for any account over which an Employee has
no direct or indirect influence or control; or
(iii) purchases made in the exercise of rights issued by an issuer pro
rata to all holders of a class of its Securities, to the extent such
rights were initially acquired from the issuer.
(c) Purchase or sale of a Security will be prohibited if that Security:
(i) is being considered for purchase or sale for any Customer
Account; or
(ii) is being purchased or sold for any Customer Account; or
(iii) is currently held in any customer account, or
(iv) involves use or possession by the Employee of material non-public
information. Employee is directed to the Wells Fargo & Company policy
and requirements for dealing with material non-public information.
(d) Pre-approval shall be effective for one business day following the day
on which granted.
(e) Employee should understand that obtaining approval does not preclude
the possibility of a potential conflict appearing after the time of the
trade. As a result, Employee may be required to "unwind" pervious
trades, even those that were previously approved under this policy.
SECTION 3. EMPLOYEE REPORTING REQUIREMENTS
(a) Personal Holdings Disclosure Requirements. Every Employee is required
to disclose within 10 days of initial employment, all personal Security
holdings and personal security accounts using the form provided in
Appendix A. Additionally, each Employee shall disclose annually all
personal Security holdings and personal security accounts using the
form in Appendix A. These reports must, at a minimum, include the
shares, principal amount and identity of every Security held except
those outlined in Section 6(d).
(b) Duplicate Trade Confirmation Requirement. In lieu of a quarterly
reports of security transactions as provided in Rule 17j-1, every
Employee must direct his/her broker(s) to supply on a timely basis,
duplicate copies of confirmations of all personal securities
transactions for all accounts in which the Employee has any beneficial
ownership. Duplicate trade confirmations are not required with respect
to transactions effected for any account over which the Employee does
not have any direct or indirect influence or control or for those
exceptions outlined in Section 6(d).
(c) All reports are to be filed with the Galliard Manger. The Galliard
Compliance Manager, will promptly review all reports and transactions
to assure compliance with this Code. Forms of reports for compliance
can be found in Appendix A.
SECTION 4. SANCTIONS
(a) Sanctions. An Employee who violates the restrictions contained in
this Code will be subject to disciplinary action, including
disgorgement of profits made or losses avoided, and/or dismissal.
(b) Notification to Funds. The President of Galliard, or his/her
designee shall notify the Board of Trustees of the Funds of each
violation of this Code by any Employee and of any sanctions applied
with respect thereto.
SECTION 5. EXCEPTIONS
The Compliance Manager after consulting with the President of Galliard, may
grant exceptions to the policies contained in this Code in appropriate
circumstances.
SECTION 6. DEFINITIONS
(a) "Employee" means any director, officer or employee of Galliard.
(b) "being considered for purchase or sale" means, with respect to a
security, any security eligible for Galliard clients' portfolio for
which a security file has been established and/or the issuer is in the
corporate issuer data base.
(c) "control" shall mean the power to exercise a controlling influence over
the management or policies of a company, unless such power is solely
the result of an official position with such company.
(d) "Security" shall mean a security as defined in Section 2(a)(36) of the
Investment Company Act of 1940 (the "Act"); provided, however, that the
term security shall not include:
(i) direct obligations of the Government of the United States or
its agencies;
(ii) high quality short-term debt instruments, including, but not
limited to, bankers' acceptances, bank certificates of deposit,
commercial paper, repurchase agreements covering any of the foregoing,
and, other money market instruments as determined by Galliard;
(iii) shares of registered open-end investment companies (i.e.,
mutual funds); and
(iv) shares of the common stock of Wells Fargo & Company. Employees are
reminded of their responsibilities/restrictions for employees of Wells
Fargo regarding Wells Fargo securities and common stock activity under
the Insider Trading Policy of Wells Fargo.
Amended and Approved Effective June 28, 2000.
-----------------------------------------------------------------
Managing Partner
-----------------------------------------------------------------
-----------------------------------------------------------------
Managing Partner
-----------------------------------------------------------------
-----------------------------------------------------------------
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Managing Partner
-----------------------------------------------------------------
<PAGE>
Galliard Capital Management, Inc.
Code of Ethics
Appendix A
<PAGE>
2
Galliard Capital Management, Inc.
Code of Ethics Procedures
Policy: The Managing Partner of Galliard in charge of compliance shall be the
responsible for administrating the Code of Ethics including all procedures,
reporting, reviews and approvals required by the Code, and shall designate the
Compliance Manager if different than himself.
Procedure:
1. Initial Employee Acknowledgement
o Compliance Manager shall review the Galliard and Wells Fargo
Code of Ethics with all new employees promptly upon arrival at
Galliard.
o Employee shall complete the Employee Initial Acknowledgement form and return
to compliance manager by the 10th day of employment.
o Compliance Manager shall review holdings and inform Employee
of any conflict of interest or other issues with the Code.
Employee shall take such action as required to comply with the
Code.
2. Annual Review of Code of Ethics
o Each year by February 28th, Compliance Manager shall set up a
meeting to review the Galliard Code of Ethics, Wells Fargo
Code of Ethics and AIMR Code of Ethics with all Employees.
Attendance will be recorded.
o Those Employees who cannot attend, will receive the review
materials individually and acknowledge they have reviewed all
materials presented and the Codes.
o Compliance Manager shall report the review is completed to
appropriate Wells Fargo Code Administrator as required by the
Wells Fargo Code of Ethics.
3. Annual Employee Acknowledgment
o Every Employee is required to complete the Annual Employee
Acknowledgement form and return it to the compliance manager
for review by February 28.
o Compliance Manager shall review all Employee holdings and
inform Employee of any conflict of interest or other issues
with the Code. Employee shall take such action as required to
comply with the Code.
4. Review of Security Transactions
o Employees are required to have duplicate confirmations for all
non-exempt personal security transactions in all personal
securities accounts promptly forwarded to Compliance Manager.
o Compliance Manager shall review all transactions as received for potential
conflicts of interest or other issues with the Codes.
5. Pre-approval Process
o Employee shall complete Request for Personal Security
Pre-Approval form and submit it to Compliance Manager before
any transaction requiring pre-approval under the Code.
o Compliance Manager shall promptly review all requests and
notify Employee whether proposed transaction is approved or
not approved.
o Employee shall provide final details of transaction through regular
confirmation process or by other report.
<PAGE>
<TABLE>
<S> <C>
Galliard Capital Management, Inc.
----------------------------------------------------------------------------------------------------------------------
Employee Initial Acknowledgement
Name
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Telephone
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Supervisor
----------------------------------------------------------------------------------------------
Personal Holdings Disclosure
I have attached a report that, at a minimum, includes the title, number
of shares and principal amount of every non-exempt security that I have
any beneficial ownership within all of my personal securities accounts
listed below.
I have no holdings except for those securities exempt by the Code.
Duplicate Trade Confirmation
I have directed the following firms (list all firms and provide account
numbers) with which I have received, personal securities accounts to
supply duplicate copies of confirmations of all personal securities
transactions for all accounts in which I have any beneficial
ownership.*
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
I have no outside broker(s).
I hereby certify that the information provided herein is complete and accurate.
I also acknowledge that I have reviewed and understand the Galliard Capital
Management, Inc. Code of Ethics, the Wells Fargo & Company Code of Ethics and
Wells Fargo Insider Trading Policy and have complied with all of its
requirements.
----------------------------------------- ------------------------------------------------------------------
Dated Signature
<PAGE>
Galliard Capital Management, Inc.
----------------------------------------------------------------------------------------------------------------------
Employee Annual Acknowledgement
Name
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Telephone
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Supervisor
----------------------------------------------------------------------------------------------
Personal Holdings Disclosure
I have attached a report that, at a minimum, includes the identity,
number of shares and principal amount of every non-exempt security that
I have any beneficial ownership within all of my personal securities
accounts listed below.
I have no holdings except for those securities exempt by the Code.
Personal Securities Accounts Disclosure
I have personal securities accounts with the following firms (include
firm and account numbers).
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
I have no outside broker(s).
I hereby certify that the information provided herein is complete and accurate.
I also acknowledge that I have received, reviewed and understand the Galliard
Capital Management, Inc. Code of Ethics, the Wells Fargo & Company Code of
Ethics and Wells Fargo Insider Trading Policy and have complied with all of its
requirements.
----------------------------------------- ------------------------------------------------------------------
Dated Signature
<PAGE>
Galliard Capital Management, Inc.
----------------------------------------------------------------------------------------------------------------------
Request for Personal Security Transaction Pre-Approval
--------------------------------------------------------- -- ---------------------------------------------------------
Date and Time Transaction Type
--------------------------------------------------------- -- ---------------------------------------------------------
--------------------------------------------------------- -- ---------------------------------------------------------
Requested by Security
--------------------------------------------------------- -- ---------------------------------------------------------
--------------------------------------------------------- -- ---------------------------------------------------------
Telephone Security Type
--------------------------------------------------------- -- ---------------------------------------------------------
--------------------------------------------------------- -- ---------------------------------------------------------
Division CUSIP
--------------------------------------------------------- -- ---------------------------------------------------------
--------------------------------------------------------- -- ---------------------------------------------------------
Supervisor # of Units
--------------------------------------------------------- -- ---------------------------------------------------------
</TABLE>
In requesting Pre-Clearance for the above transaction, I certify that:
o I have read and agree to be bound by the Galliard Capital Management,
Inc. Code of Ethics, and the Wells Fargo & Company Code of Ethics and
Wells Fargo Insider Trading Policy. This proposed transaction would not
violate any of the above.
o This trade will not compete with and is not in conflict with any recent
or imminent security trade of a Fund or other client for which I am an
Access Person.
o I have no knowledge that this security is currently being considered for
purchase or sale by a Fund or other client.
o This trade is not being contemplated for the purpose of receiving
personal financial gain in connection with any recent or imminent
security trade of a Fund or by another client.
<TABLE>
<S> <C> <C> <C>
Signed
Trade Approval
Trade Approved Trade Disapproved
By approving this trade, I certify that I am not aware of Reason for trade
disapproval: any reason this trade is in conflict with any Wells Fargo policy,
Galliard Policy or Fund.
------------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- -------------------------------------------------
Signed Signed
------------------------------- ---------------------------- -------------------------------------------------
------------------------------- ---------------------------- ----------------------------
Date and Time Date
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
Instructions for completion of form:
o Complete all boxes and sign form. Use a separate form for each security.
o Have Compliance Officer approve the transaction, or in his/her absence,
another Galliard partner. o A copy of this form with original signatures must be
filed with the Galliard, Inc. Compliance Officer. o Trade must be completed with
one business day of approval, or re-approval must be obtained.
1 An adviser is primarily engaged in a business or businesses other than
advising registered investment companies or other advisory clients if, for each
of its most recent three fiscal years or for the period of time since its
organization, whichever is less, the investment adviser derived, on an
unconsolidated basis, more than 50% of its total sales and revenues and more
than 50% of its income (or loss), before income taxes and extraordinary items
from the other business or businesses.
* Copies of broker(s) documentation are to be directed to the following:
Galliard Capital Management, Inc.
Attention: Compliance Department
800 LaSalle Avenue, Suite 2060
Minneapolis, MN 55402-2033
2 High quality short-term debt instruments means any instrument having a
maturity at issuance of less than 366 days and which is rated in one of the
highest two rating categories by a Nationally Recognized Statistical Rating
Organization, or which is unrated but is of comparable quality.
3 Please note that Schroder Unit Trusts Limited does not currently accept
investments by US Persons into Schroders UK authorized unit trusts.
4 An IPO is an offering of securities registered under the Securities Act, the
issuer of which, immediately before the registration, was not subject to
reporting requirements under the federal securities laws.
5 A private placement is an offering of securities that are not registered under
the Securities Act because the offering qualified for an exemption from the
registration provisions.
6 As defined in Section 2(a)(19) of the Investment Company Act.
7 High quality short-term debt instruments means any instrument having a
maturity at issuance of less than 366 days and which is rated in one of the
highest two rating categories by a Nationally Recognized Statistical Rating
Organization, or which is unrated but is of comparable quality.
8 Please note that Schroder Unit Trusts Limited does not currently accept
investments by US Persons into Schroders UK authorized unit trusts.
<PAGE>
Page 4 of 4
Section: A-8
EX-99.B(p)(6)
PEREGRINE CAPITAL MANAGEMENT
Policy Manual
Use of Insider Information
SUMMARY Employees shall not purchase or sell securities on
the basis of material, inside (nonpublic) information
for their own account or for the accounts managed by
Peregrine Capital Management, nor shall they disclose
any material, inside information in their possession
to others or recommend securities based on such
information.
--------------------------------------------------------------------------------
STANDARDS
--------------------------------------------------------------------------------
1. Material inside (nonpublic) information is any information about a
company or the market for the company's securities which has come
directly or indirectly from the company and which has not been
disclosed generally to the marketplace, the dissemination of which is
likely to affect the market price of any of the company's securities or
is likely to be considered important by reasonable investors, including
reasonable speculative investors, in determining whether to trade in
such securities.
2. Information should be presumed "material" if it relates to such matters
as dividend increases or decreases, earnings estimates, changes in
previously released earnings estimates, significant expansion or
curtailment of operations, a significant increase or decline of orders,
significant merger or acquisition proposals or agreements, significant
new products or discoveries, extraordinary borrowing, major litigation,
liquidity problems, extraordinary management developments, purchase or
sale of substantial assets, etc.
3. Information received about a company under circumstances which indicate
that it is not yet in general circulation and that such information may
be attributable, directly, or indirectly to the company (or its
insiders) is deemed to be inside information.
4. Allocation of brokerage business to broker-dealers shall not be in
consideration of the furnishing of material inside information.
5. If an employee has any question as to whether information is material
or whether it is inside and not public, he or she must resolve the
question or questions before trading, recommending trading, or
divulging the information.
6. Employees shall not purchase or sell securities for their own account
or for the accounts managed by Peregrine Capital Management on the
basis of material, non-public information in their possession.
Employees shall not disclose any material, inside information in their
possession to others or recommend securities based on such information.
Fiduciary responsibility does not require an employee to disregard the
limitations imposed by the federal securities laws, particularly Rule
10b-5.
7. If there is any unresolved question whatsoever in an employee's mind as
to the applicability or interpretation of the foregoing standards of
the propriety of any desired action, the matter must be discussed with
Peregrine's President or Compliance Director and the Legal Division of
Norwest prior to trading or recommending trading.
8. Employees with access to material or inside information about Norwest
must obtain prior approval from the General Counsel of Norwest for all
purchases or sales of securities issued by Norwest.
9. No employees shall invest in options, future contracts, puts, calls,
short sales or other similar transactions involving securities issued
by Norwest Corporation.
10. Employees are required to report monthly all personal securities
transactions by or on behalf of such employee. These
transactions are reviewed by the Compliance Officer.
<PAGE>
Section: A-8
PEREGRINE CAPITAL MANAGEMENT
Policy Manual
Employee Securities Transactions
SUMMARY Peregrine prohibits Employees from engaging in any
securities transactions that would violate its
Standards of Conduct or would create a conflict of
interest with any of our clients, including our
investment management responsibilities for the Wells
Fargo mutual funds.
--------------------------------------------------------------------------------
STANDARDS
--------------------------------------------------------------------------------
1. All Peregrine employees/officers/directors ("Employees") are required
to get written Pre-Clearance (prior approval) from the Compliance
Officer, the President of the firm, or a designate of the
President/Compliance Officer before executing any security transaction
in any account in which the Employee has any direct or indirect
beneficial ownership. Such transactions include, but are not limited to
purchases or sales of securities and private placements and purchases,
sales, and exercises of puts, calls and warrants. The Compliance
Officer, the President of the firm, or a designate of the
President/Compliance Officer must record the rationale for granting
approval to purchase a private placement.
2. Beneficial Ownership Defined. As an Employee, you should generally
consider yourself to have a "beneficial ownership" of any securities in
which you have a direct or indirect financial interest. In addition,
you should consider yourself the beneficial owner of securities held by
your spouse, your minor children, a relative who shares your home, or
other persons by reason of any contract, arrangement, understanding or
relationship that provides you with sole or shared voting or investment
power.
3. An Employee must execute an approved security transaction within one
business day from the date of its approval.
4. Pre-Clearance (with the exception of private placements) is not
required for: purchases or sales for any account over which the
Employee has no direct or indirect influence or control; purchases
which are part of an automatic dividend reinvestment plan; or purchases
made in the exercise of rights issued by an issuer pro rata to all
holders of a class of its securities, to the extent such rights were
initially acquired from the issuer.
5. Employees are prohibited (Pre-clearance will not be granted) from
making any transaction in a security which is contrary to the advice
given or action taken (except such actions required to accommodate
contributions/withdrawals) on behalf of any client with respect to that
security; such prohibition is applicable for five business days after
transactions on behalf of customer.
6. Employees are prohibited (Pre-clearance will not be granted) from
purchasing securities purchased for customers (or selling security
which customers have been advised to sell or which are sold for
customers) until such time as all intended transactions on behalf of
customers have been completed.
7. Employees are prohibited (Pre-clearance will not be granted) from
purchasing or selling any security that is being considered for
purchase or sale (under discussion between members of an investment
team) in any customer's account.
8. Employees are prohibited (Pre-clearance will not be granted) from
executing any transaction if that transaction:
a) Would result in the buying or selling of securities
in competition with buy or sell orders for any
customer's account;
b) Would be for the purpose of, or result in, buying or
selling securities to take advantage of recent or
imminent trades in any customer's account;
c) Would involve the security of a company with respect
to which the Employee has material non-public information;
d) Would involve trading in options on any of the stocks
held by or contemplated for any customer's account;
e) Would take place before a sufficient period of time
(not more than 10 business days) has elapsed after a
purchase or sale transaction for a customer's account
for the effects of that transaction on the market
price to dissipate (even if five business days may
have elapsed); or
f) Would involve the acquisition of a direct or indirect
beneficial interest in an initial public offering.
9. No employee shall cause or attempt to cause any client portfolio to
purchase, sell or hold any security in a manner calculated to create
any personal benefit to the Employee. No Employee shall recommend any
securities transactions for customer accounts without having disclosed
their interest, if any, in such securities or the issuer thereof,
including, without limitation;
a) Their direct or indirect beneficial ownership of any
securities of such issuer;
b) Any position with such issuer or its affiliates; and
c) Any present or proposed business relationship between
such issuer or its affiliates and the Employee or any
party in which the Employee has a significant
interest.
10. Employees are required to submit annually a list of the securities in
which they have a direct or indirect beneficial ownership. New Employees should
submit a list of the securities in which they have a direct or indirect
beneficial ownership within 10 days of employment at Peregrine. The
Compliance Officer or his designate will review these reports. Employees must
direct their brokers to supply to Peregrine Capital Management (attention:
Compliance Officer), on a timely basis, duplicate copies of confirmations of all
personal securities transactions and copies of periodic statements for all
accounts in which the Employee has any beneficial ownership. These reports
require the following information (which information must be current as of
a date no more than 30 days before the annual report is submitted):
(a) The title, number of shares and principal amount of each security in which
the Employee had any direct or indirect beneficial ownership when the person
became an Employee or upon annual submittal;
(b) The name of any broker, dealer or bank with whom the Employee maintained
an account in which any securities were held for the direct or indirect benefit
of the Employee as of the date the person became an Employee or the date
of the annual submittal; and (c) The date that the report is submitted by the
Employee.
11. Except as required in the normal course of carrying out an Employee's
business responsibilities, Employees are prohibited from revealing
information relating to the investment intentions or activities of
customer accounts or securities that are being considered for purchase
or sale on behalf of any account.
12. Employees are required to report monthly all personal securities
transactions by or on behalf of such Employee within 10 days following the end
of the reporting period. The Compliance Officer or his designate will review
these transactions. These reports require the following information:
(a) The date of the transaction, the title, the interest rate and maturity date
(if applicable), the number of shares and the principal amount of each security
involved;
(b) The nature of the transaction (i.e., purchase, sale or any other type of
acquisition or disposition);
(c) The price of the security at which the transaction was effected;
(d) The name of the broker, dealer or bank with or through which the
transaction was effected; and
(e) The date that the report is submitted by the Employee; and
(f) With respect to any account established by the Employee in which any
securities were held during the month for the direct or indirect benefit of the
Employee:
(i) The name of the broker, dealer or bank with whom the Employee
established the account;
(ii) The date the account was established; and (iii) The date that the report is
submitted by the Employee.
13. Any exceptions to these standards require prior approval in writing
from the President of the firm (and Wells Fargo Compliance if involving
the mutual funds).
14. Employee transactions in securities issued or guaranteed by the U.S.
Treasury or any other "Government security" as defined in Section
2(a)(16) of the Investment Company Act of 1940 with a remaining
maturity of 12 months or less, banker's acceptances, bank certificates
of deposit, commercial paper, repurchase agreements covering any of the
foregoing and shares of registered open-end investment companies are
excluded from these policies and standards.
15. Employee transactions in municipal bonds or municipal closed-end bond
funds do not require prior approval, but they must be reported monthly.
Should Peregrine become active in purchasing municipal securities on
behalf of its clients, this exemption from the prior approval process
will be eliminated.
16. Employees who violate these policies will be subject to disciplinary
action, which could include disgorgement of profits made or losses
avoided and/or dismissal.
<PAGE>
EX-99.B(p)(7)
CODE OF ETHICS
Scope and Purpose
<TABLE>
<S> <C> <C>
This Code of Ethics (the "Code") applies to:
o all directors, officers and employees of: } }
- Schroder Investment Management North America Collectively }
Inc., } "SIM }
- Schroder Investment Management North America NA" } Collectively
Limited } The "US
- Schroder Fund Advisors Inc., ("SFA") } Schroder
o Schroder Investment Management International } Group"
Limited ("SIMIL") }
o New York based employees of Schroder US }
Holdings Inc. ("SI") who are located on the 34th }
floor of Seventh Ave, New York, N.Y. 10019.
o all persons employed by any subsidiary of }
Schroders plc ("Schroders") who are Access }
Persons (as defined below) of any registered }
investment company managed by SIM NA. }
</TABLE>
Set forth below is the Code of Ethics (the "Code") for the US Schroder Group, as
required by Rule 17j-1 under the Investment Company Act of 1940 (the "Investment
Company Act"), Section 204A of the Investment Advisers Act of 1940 (the
"Advisers Act"), Rule 204-2(a)(12) under the Advisers Act and Section 20A of the
Securities Exchange Act of 1934 (the "Exchange Act"). The Code applies to every
employee (full- and part-time) of the US Schroder Group.
The objective of the Code is to ensure that all business dealings and securities
transactions undertaken by employees, whether for clients or for personal
purposes, are subject to the highest ethical standards. Incorporated within the
Code are an Insider Trading Policy and a Personal Securities Transactions
Policy, which contain procedures that must be followed by all personnel.
Every employee, by means of an Annual Certification of Compliance with the Code
of Ethics (see Exhibit B), must retain, read and acknowledge receipt and
understanding of this Code, which will be updated as necessary. Any questions
regarding the Code should be referred to the appropriate Ethics Supervisor.
The Code contains additional restrictions and requirements for certain Access
Persons (as defined in Appendix A), including all US Schroder Group fund
managers, investment analysts, traders, and those employees who, in connection
with their duties, are aware of securities under consideration for purchase or
sale on behalf of clients. Such persons will be notified in writing of their
status. These restrictions are designed to prevent any conflict or the
appearance of any conflict of interest between trading for their personal
accounts and securities transactions initiated or recommended for clients.
Statement of Policies
Confidentiality
Personnel are expected to honor the confidential nature of company and
client affairs. Information designated as confidential shall not be
communicated outside of the US Schroder Group or other affiliated
companies of Schroders other than to advisers consulted on a
confidential basis, and shall only be communicated within Schroders on
a "need to know" basis or as otherwise authorized by management in
conformity with the Code.
Personnel must also avoid making unnecessary disclosure of any internal
information concerning Schroders and its business relationships and
must use such information in a prudent and proper manner in the best
interests of Schroders and its clients.
Level of Care
Personnel are expected to represent the interests of Schroders and its
clients in an ethical manner and to exercise due skill, care, prudence
and diligence in all business dealings, including but not limited to
compliance with all applicable regulations and laws, and to avoid
illegal activities and other conduct specifically prohibited to its
personnel by the respective policies of any of the US Schroder Group
companies in relation to which a person is a director, officer or
employee.
Fiduciary Duties
All personnel have fiduciary duties:
at all times to place the interests of their clients before their own
and not to take inappropriate advantage of their position, and
to conduct themselves in a manner which will avoid any actual or
potential conflict of interest or any abuse of a position of trust and
responsibility.
Requirements
(i) Personnel are required to comply with the Insider Trading
Policy and Personal Securities Transactions Policy
incorporated herein.
(ii) Personnel are prohibited from receiving any gift or other
thing of more than de minimis value from any person or entity
that does business with or on behalf of any client.
Personnel are prohibited from serving on the board of directors of any publicly
listed or traded company or of any company whose securities are held in any
client portfolio, except with the prior authorization of the Chairman or Chief
Executive of SIM NA, the Chairman of SIMIL or, in their absence, a majority of
the Ethics Committee, based upon a determination that the board service would be
consistent with the interests of Schroders' clients. If permission to serve as a
director is given, the company will be placed permanently on Section Two of the
US Schroder Group Restricted List. Transactions in that company's securities for
client and personal securities accounts will only be authorized when
certification has been obtained from that company's Secretary or similar officer
that its directors are not in possession of material price sensitive information
with respect to its securities.
Compliance
The Ethics Committee (see Appendix A) is responsible for ensuring that a copy of
the Code is delivered to all persons at the time of the commencement of their
employment with any US Schroder Group company, as well as on an annual basis. As
a condition of continuing employment, each employee is required to acknowledge
in writing receipt of a copy of the Code and that he or she has understood the
obligations and responsibilities hereunder and on an annual basis to certify
compliance with it on the form provided.
The Ethics Supervisors (see Appendix A) are each responsible for maintaining
with respect to their company the records and filings required under the Code
and must report immediately to the Ethics Committee any evidence of a breach of
the Code by any personnel. Following such report, there will be a prompt review
of the situation by the Ethics Committee and, if necessary, appropriate
disciplinary and/or dismissal proceedings will be instituted, including, but not
limited to, referral to the appropriate regulatory agency. Each Ethics
Supervisor will conduct a regular annual review, in addition to any other
special reviews which may be deemed appropriate by the Ethics Supervisor, to
supervise the operation of the Code (including the Insider Trading and Personal
Securities Transactions Policies) and will report such reviews by January 31st
of each year to the Ethics Committee or other senior officer of the US Schroder
Group appointed to receive this information.
Questions
All questions about an individual's responsibilities and obligations under the
Code of Ethics should be referred to any member of the Ethics Committee, to the
Chief Compliance Officer in New York or London, to the General Counsel of
Schroder U.S. Holdings Inc., or to the relevant Ethics Supervisor.
<PAGE>
INSIDER TRADING POLICY
The Scope and Purpose of the Policy
It is a violation of United States federal law and a serious breach of
Schroders' policies for any employee to trade in, or recommend trading in, the
securities of a company, either for his/her personal gain or on behalf of the
firm or its clients, while in the possession of material, nonpublic information
("inside information") which may come into his/her possession either in the
course of performing his/her duties, or through personal contacts. Such
violations could subject you, Schroders, and our parent organizations, to
significant civil as well as criminal liability, including the imposition of
monetary penalties, and could also result in irreparable harm to the reputation
of Schroders. Tippees (i.e., persons who receive material, nonpublic
information) also may be held liable if they trade or pass along such
information to others.
The US Insider Trading and Securities Fraud Enforcement Act of 1988 ("ITSFEA")
requires all broker-dealers and investment advisers to establish and enforce
written policies and procedures reasonably designed to prevent misuse of
material, non-public information. Although ITSFEA itself does not define
"insider trading", the US Supreme Court has previously characterized it as the
purchase or sale of securities (which include debt instruments and put and call
options) while in possession of information which is both material and
non-public, i.e., information not available to the general public about the
securities or related securities, the issuer and in some cases the markets for
the securities. The provisions of ITSFEA apply both to trading while in
possession of such information and to communicating such information to others
who might trade on it improperly. This policy supplements the policies and
procedures set forth in SIM NA, SFA's and SI's Chinese Wall Procedures, which
are incorporated herein by reference.
Materiality
Insider information is generally understood as material information about an
issuer of publicly-traded securities that has not been made known to either the
professional investment community or to the public at large. Inside information
is material if it would be likely to have an effect on the price of the issuer's
securities or if a reasonable investor would be likely to consider it important
in making his/her investment decision. Such information usually originates from
the issuer itself and could include, among other things, knowledge of a
company's earnings or dividends, a significant change in the value of assets,
changes in key personnel or plans for a merger or acquisition.
For example, a portfolio manager, analyst or trader may receive information
about an issuer's earnings or a new product in a private communication with the
issuer. Such information is usually considered material and is generally inside
information because it has not been effectively disseminated to the public at
large. As a general rule, any information received from an issuer that has not
been made public in a press release or a public filing will be considered inside
information. Upon learning the information, the employee may not purchase or
sell securities of the issuer for him/herself or for any account under
management until the information is effectively disseminated to the public.
If an employee has received information regarding an issuer and he/she believes
that the information given has not been given in breach of fiduciary duties,
then that person may retain and act upon the information.
Market information which emanates from outside the corporation but affects the
market price of an issuer's securities can also be inside information. For
example, inside information can also originate within Schroders itself. This
would include knowledge of activities or plans of an affiliate, or knowledge of
securities transactions that are being considered or executed on behalf of
clients. Inside information can also be obtained from knowledge about a client
that an employee has discovered in his/her dealings with that client. Inside
information pertaining to a particular issuer could also involve another company
that has a material relationship to the issuer, such as a major supplier's
decision to increase its prices.
In addition, Rule 14e-3 under the Exchange Act makes it unlawful to buy or sell
securities while in possession of material information relating to a tender
offer, if the person buying or selling the securities knows or has reason to
know that the information is nonpublic and has been acquired, directly or
indirectly from the person making or planning to make the tender offer, from the
target company, or from any officer, director, partner or employee or other
person acting on behalf of either the bidder or the target company. This rule
prohibits not only trading, but also the communication of material, nonpublic
information relating to a tender offer to another person in circumstances under
which it is reasonably foreseeable that the communication will result in a trade
by someone in possession of the material, nonpublic information.
Procedures and Responsibilities of Employees
Personnel who acquire non-public information (that may possibly be
material) about a company are immediately prohibited:
from trading in the securities of that company or
related securities and financial instruments
(as defined below) whether for client
accounts, for Schroder company accounts, or
for any Personal Account (see definition in
Appendix A), and
from communicating the information either inside or
outside Schroders except as provided below. Such personnel, other than
Senior Executives as defined in the Chinese Wall Procedures, are
required immediately to notify the
most senior-ranking available member of the Ethics Committee (see Appendix A)
who will evaluate whether the information is both material and non-public.
IF YOU ARE IN ANY DOUBT, SPEAK TO THE SENIOR-RANKING AVAILABLE MEMBER
OF THE ETHICS COMMITTEE.
If the information is determined by this member of the Ethics Committee
to be material and non-public, all securities of the relevant company (or
companies) and related securities or financial instruments will be placed on
Section One of the US Schroder Group Restricted List (see discussion below) with
immediate effect.
Only the member of the Ethics Committee who determined the information
to be material and non-public may decide whether it is necessary to communicate
the Inside Information to another party, either inside or outside Schroders. If
so, the communication must state clearly and expressly that such information is
material, non-public and confidential and that its possession precludes trading
for any account in any security of the specified company or any related security
or financial instrument.
This same member of the Ethics Committee is responsible for notifying
the Ethics Supervisor when such information ceases to be material and non-public
and for ensuring that the securities of the relevant company or companies and
related securities or financial instrument are removed from the US Schroder
Group Restricted List. The person who initially reported possession of the
information is required to notify the member of the Ethics Committee of any
change in status of the information of which he or she becomes aware.
All employees are also responsible for preventing disclosure of any
non-public information in Schroders' possession, whether or not that information
is material, except in accordance with the procedures set out in this Policy.
Any files likely to contain non-public information must be kept locked
and access to computerized files must be restricted at all times, except when
required by authorized personnel for the performance of their duties at
Schroders.
Non-public information which has not been deemed to be material under
2. above may be communicated only to such personnel as require such information
for the performance of their duties at Schroders.
Penalties
Penalties for trading on or communicating material, nonpublic information are
severe, both for the individuals involved in such unlawful conduct and their
employers. Under the law, a person can be subject to some or all of the
penalties below, even if s/he does not personally benefit from the violation.
Penalties include:
civil injunctions;
disgorgement of profits;
treble damages--fines for the access person
who committed the violation, of up to 3
times the profit gained or loss avoided,
whether or not the person actually
benefited;
fines for the employer or other controlling
person of up to the greater of $1,000,000,
or 3 times the profit gained or loss
avoided; and jail sentences.
Special Provisions For Trading In the Securities of Schroders plc
Special restrictions apply to dealing in the securities of Schroders plc because
staff, by virtue of their employment, may be deemed to have Inside Information:
1. Securities of Schroders plc will not be purchased for any client
account without the permission of that client, and then only if
permitted by applicable law and with the prior approval of a member of
the Ethics Committee or Ethics Supervisor.
2. Personal securities transactions in the securities of Schroders plc are
subject to blackout periods and other restrictions which are outlined
in the Schroder London Group Staff Handbook. Copies of the restrictions
are available from the Ethics Supervisors. Staff wishing to deal in the
securities of Schroders plc must first contact the senior-ranking
dealer in Schroders' London equity dealing room who will explain the
applicable blackout periods, restrictions and authorizations required.
US Schroder Group Restricted List
The US Schroder Group Restricted List is circulated only to those employees
responsible for placing securities trades, to members of the Ethics Committee
and to the Ethics Supervisors.
Section One: No personnel may place trades in any securities, which term
includes options, warrants, debentures, futures, etc., on such securities
(hereinafter referred to as a related security or financial instruments, of any
company on Section One of the US Schroder Group Restricted List for any account
whatsoever, including client accounts, Schroder company accounts or Personal
Accounts at any time.
Section Two: Trades in the securities or related securities or financial
instruments of any company on Section Two of the US Schroder Group Restricted
List (which contains those companies that have an officer of a US Schroder Group
Company on their board of directors, or where a US Schroder Group Company
manages a part of their balance sheet assets, i.e., corporate cash rather than
pension fund assets) may only be undertaken with the written permission of the
appropriate Ethics Supervisor.
No approval to trade will be given by the Ethics Supervisor:
(ii) for any securities of a company currently on Section One of the US
Schroder Group Restricted List;
(iii) for any security of a company on Section Two of the US Schroder Group
Restricted List because an officer of a US Schroder Group company serves as a
director of that company unless the Ethics Supervisor (or alternate) can
obtain confirmation from that company's Secretary or similar officer that
its directors are not in possession of material price sensitive information
with respect to its securities. Permission to trade in the securities of
any company on Section Two of the US Schroder Group Restricted List
because a US Schroder Group Company manages balance sheet assets for that
company (as opposed to pension fund assets) will only be given if the Ethics
Supervisor (or alternative) can obtain confirmation from the portfolio
manager responsible for that client that no US Schroder Group Company
holds any price sensitive information with respect to that company.
Permission will not, in any event, be given to any personnel personally
involved in the management of that client's account.
<PAGE>
PERSONAL SECURITIES TRANSACTIONS
POLICY
Scope and Purpose of the Policy
This Personal Securities Transactions Policy sets out the policies and
procedures required to be followed by all personnel in connection with trades
for Covered Accounts in Covered Securities (see Appendix A) in order to comply,
inter alia, with the US Schroder Group's Code of Ethics. It sets out additional
restrictions and requirements for Level One Access Persons (as defined in
Appendix A). Further, it sets out the policies and procedures required to be
followed by outside directors (as defined in Appendix A) of Schroder Capital
Funds, Schroder Capital Funds (Delaware) and Schroder Series Trust
(collectively, the "Schroder Funds").
SIM NA London, New York, SIMIL, and SI-New York Personnel
The procedures applicable to personnel employed by SIM NA in London and the US,
SIMIL, and to SI - New York personnel vary in detail but not in principle.
Establishing an Account
Before undertaking any transactions in Covered Securities, employees must
establish an account in accordance with the requirements of their employer
company.
New York
All US-based personnel of SIM NA and SI, unless exempted in writing by the
Ethics Committee, are required to maintain their Covered Accounts at Salomon
Smith Barney ("SSB") or Charles Schwab & Co. ("Schwab"). SSB and Schwab provide
an electronic download of employees' trades on T+1 which are accessed daily by
the Compliance Department. Additionally, both firms provide contemporaneous
copies of monthly account statements and trade confirmations to the Compliance
Department.
Personnel on secondment from London to New York may apply for a waiver of the
requirement to maintain brokerage accounts at SSB or Schwab for non-US
securities. At a minimum, such personnel must follow the procedures set forth in
the "Schroder Investment Management London Group Personal Investment Dealing
Rules" as described below and report their transactions in Covered Securities
quarterly to the New York Ethics Supervisor.
London
All London-based personnel are required to comply with the requirements of the
"Schroder Investment Management London Group Personal Investment Dealing Rules,"
which are incorporated herein by reference, including placing all transactions
in Covered Securities through the Schroder London dealing room. London-based
personnel must establish an account to deal through Schroders' London dealing
room according to the procedures set out in the London Staff Handbook. Such
procedures are incorporated herein by reference within this Personal Securities
Transactions Policy. Upon establishing an account, London-based personnel
covered by this Policy are required to make arrangements for copies of all
contracts and confirmations to be sent to their Ethics Supervisor.
Toronto and Mexico City
All Toronto and Mexico City based SIM NA personnel may maintain Covered Accounts
at the brokerage firm of their choosing, provided that Compliance (New York) is
notified. These employees are required to provide Compliance with copies of
monthly/periodic account statements and trade confirmations.
Transactions
All transactions fall into one of four categories:
o transactions prohibited by the Policy
o transactions exempt from all provisions of the Policy
o transactions exempt from the pre-clearance requirements but subject to
the reporting provisions of the Policy
o transactions subject to pre-clearance and the reporting provisions
Prohibited Transactions
All personnel are prohibited from trading for any Covered Account where the
execution of any such transaction would violate the principles and procedures of
the Code or Insider Trading Policy and no personnel shall request permission to
trade for any Covered Account if he or she knows that such trade:
(iv) would result in the buying or selling of securities in competition with
buy or sell orders of, or on behalf of, clients, or operate to the
detriment of such clients including, without limitation, executing a
securities transaction on a day during which any client, including any
investment company for which a US Schroder Group company serves as
investment adviser, sub-advisor or manager (a "Schroder Managed Fund"),
has a pending "buy" or "sell" order in that same security until that
order is executed or withdrawn;
(v) would be for the purpose of, or result in, the buying or selling of
securities to take advantage of recent or imminent trades of clients;
(vi) would involve a security being considered for recommendation for
purchase or sale on behalf of a client;
(vii) would take place before a sufficient period of time has elapsed after
an open-market purchase or sale of any such security, by or on behalf
of any client, for the effects of such purchase or sale on the market
price to dissipate;
(viii) would involve any security of any company currently on the US Schroder
Group Restricted List or any company with respect to which such person
has non-public information which has not been evaluated by a member of
the Ethics Committee in accordance with the provisions of the Insider
Trading Policy;
(ix) would involve trading in options on any of the stocks held by or
contemplated for client accounts;
(x) would involve a "short sale" or otherwise would expose the employee to
unlimited risk of loss.
De minimis exception: Transactions involving shares in certain companies traded
on US stock exchanges or the NASDAQ, will be approved regardless of whether
there are outstanding client orders unless there is a large outstanding order
for the purchase or sale of such securities by clients. A large order will
generally occur if the US equity large cap model has been revised. Other than an
adjustment in the model, outstanding orders for wrap fee or managed accounts or
to re-balance institutional or private accounts, will not preclude clearance for
a de minimis transaction.
The exception applies to transactions involving no more than 500 shares per
issuer per week in the aggregate for an employee's Covered Accounts, in
securities of companies with market capitalizations of $5 billion or more. In
the case of options, an employee may purchase or sell up to 5 option contracts
per week to control up to 500 shares in the underlying security of such large
cap company
Short Term Trading
All personnel are strongly advised against short-term trading. All
personnel are bound by the Schroder Group policy that no one may
purchase and sell the same (or equivalent) security within seven
calendar days. (Please note that all London-based personnel are bound
by the 60 day holding period outlined below for Level One Access
Persons.) Such personnel are, in addition, subject to tighter
restrictions outlined below. The trading records of all personnel will
be reviewed quarterly by their Ethics Supervisor. Any personnel that
appear to have established a pattern of short term trading may be
subject to additional restrictions or penalties including, but not
limited to, a limit or ban on future personal trading activity and a
requirement to disgorge profits on short-term trades.
The Short Term Trading Prohibition shall not pertain to the exercise of
a call sold by an employee to cover a long position. However, although
an employee may purchase a put to cover a long position, the exercise
of such put will only be approved if the underlying security was held
for the minimum required period (7 days or 60 days, as appropriate).
The exercise of a covered put is subject to the same preclearance and
reporting requirements as the underlying security.
Covered Securities
Securities, such as stocks, bonds and options, are covered by this Policy. The
same limitations pertain to transactions in a security related to a Covered
Security, such as an option to purchase or sell a Covered Security and any
security convertible into or exchangeable for a Covered Security.
Not covered by this Policy are:
o securities which are direct obligations of the U.S. Government (i.e.,
Treasuries)
o any debt security directly guaranteed by any OECD member Government
o bankers' acceptances, bank certificates of deposit, commercial
paper, repurchase agreements and other high quality short-term
debt instruments2
o shares or units in any open-end US registered investment company
(mutual fund)
o shares of any UK authorized unit trust3
If a security is not covered by this Policy, you may purchase or sell it without
obtaining pre-clearance and you do not have to report the transaction.
Exempt from Preclearance
The preclearance requirements do not apply to the following
transactions. However, such transactions must be reported as set forth
in the section on Reporting Requirements.
1) Non-discretionary Accounts
Transactions effected in any Covered Account over which the
employee has no direct or indirect influence or control is
deemed a non-discretionary account. An employee shall be
deemed to have no direct or indirect influence or control over
an account only if the following conditions are met:
Investment discretion for such
account has been delegated in
writing to an independent fiduciary
and such investment discretion is
not shared with the employee or
decisions for the account are made
by a family member and not by the
employee;
The employee (and where applicable,
the family member) certifies in
writing that he/she has not and will
not discuss any potential investment
decisions with such independent
fiduciary or family member; and
The Ethics Committee approves such
arrangements.
2) Non-Volitional Trades
Transactions which are non-volitional on the part of the
employee (i.e., the receipt of securities pursuant to a stock
dividend or merger). However the volitional sale of securities
acquired in a non-volitional manner is treated as any other
securities trade and subject to the preclearance requirements.
3) Automatic Transactions and Dividend Reinvestment Plans
Purchases of the stock of a company pursuant to an automatic
dividend reinvestment plan, automatic direct stock purchase
plan, dividend reinvestment plan or an employee stock purchase
plan sponsored by such company. Such deductions that take
place on an automatic, regular (i.e.. weekly, monthly,
quarterly) basis from either a paycheck or account (i.e., bank
account, money market account) need not be pre-cleared.
However the volitional sale of such securities is treated as
any other securities trade and subject to the preclearance
requirements. In addition, if an employee mails in a payment
to purchase securities directly from the issuer, that purchase
must be pre-cleared on the day the payment is mailed in to the
issuer (see the following section).
4) Rights Offerings
Receipt or exercise of rights issued by a company on a pro
rata basis to all holders of a class of security and the sale
of such rights. Employees must, however, pre-clear
transactions for the acquisition of such rights from a
third-party or the disposition of such rights.
Trading PreClearance
Before each transaction in a Covered Security, all personnel must complete a
"Personal Securities Transaction - Request to Trade" form (see Appendix C).
U.S. Securities
Personnel wishing to trade in US securities must have the form signed by the
senior fund manager present (in New York or London and corresponding to the
director's, officer's or employee's location) responsible for supervising client
investments in large capitalization US equities, small capitalization US
equities, investment grade fixed income securities or high yield securities, as
appropriate, to the effect that no client trades are presently contemplated in
that security. Boston-based personnel wishing to trade in small capitalization
US equities should obtain certification from the senior fund manager in Boston;
all other personnel wishing to trade in small capitalization US equities should
obtain certification from the senior New York or London-based (as applicable)
small company fund manager.
If you wish to purchase an initial public offering4 or securities in a private
placement5 you must obtain permission from the Chief Compliance Officer.
Any employee who has been authorized to acquire securities in a Private
Place is required to disclose that investment in any subsequent
consideration of a client's investment in securities of the issuer. In
such circumstances, the decision to purchase securities of the issuer
for a client shall be subject to an independent review by personnel
with no personal interest in the matter.
Non U.S. Securities
Personnel wishing to trade in non-US equity securities must obtain
certification, by fax if necessary, from the senior London-based SIM NA or SIMIL
fund manager responsible for supervising client investments in the country where
such securities are primarily traded. Country funds and ADRs are treated as
non-US securities and certification must therefore be obtained from the senior
London based SIM NA or SIMIL fund manager responsible for the relevant country.
Approval of Trading
Final responsibility for approving all trades, other than those placed through
Schroders' London dealing room, rests with the Ethics Supervisor, or in his/her
absence with any member of the Ethics Committee. London-based personnel must
send the signed Request to Trade form to their Ethics Supervisor at the same
time that the required dealing ticket is submitted to the senior-ranking dealer
in Schroders' London dealing room. Members of the Ethics Committee, including
the Ethics Supervisor, shall have their own personal trades, other than those
placed through Schroders' London dealing room, approved by another member of the
Ethics Committee.
If an employee receives permission to trade a security or instrument, the trade
must be executed after such permission is granted and, for US-based personnel
before the end of the next business day after permission has been received.
Trades for London-based personnel must be executed within 24 hours after
permission is granted. If the trade is not executed within the appropriate time
frame and the person still wishes to effect the transaction, pre-clearance must
again be obtained - this would be the case for limit orders and orders such as
good-till-canceled as well.
(For Personal Equity Plans and similar vehicles which are subject to a mandatory
cooling-off period, trade date shall be deemed to be the date on which the
application is submitted rather than the date on which the cooling-off period
expires and not the date the trade is executed.)
If an employee fails to preclear a transaction in a Covered Security, he/she may
be monetarily penalized, by a fine and/or disgorgement of profits or avoidance
of loss. These types of violations will result in reprimands and could also
negatively affect the person's employment at Schroders. All preclearance
violations will be forwarded to the Ethics Committee to determine sanctions.
In cases where approval is not granted for any Covered Account transactions in a
security, Schroders will provide no compensation for any consequential losses in
a Covered Account.
Additional Restrictions and Requirements For Level One Access Persons
The following additional restrictions and requirements apply to Level One Access
Persons, namely all US Schroder Group fund managers, investment analysts,
traders and those persons who, in connection with their regular functions or
duties, obtain: (i) information regarding the purchase or sale of a security on
behalf of a client or (ii) information as to specific securities under
consideration for purchase or sale on behalf of clients. These additional
restrictions are designed to prevent any conflict or the appearance of any
conflict of interest between trading for their Covered Accounts and securities
transactions initiated or recommended by them for clients:
Level One Access Persons
are prohibited from buying
or selling a security
within seven calendar days
before and after any client
trades in that security.
Any profits realized on
transactions within the
proscribed periods (based
on the difference in the
price per share between
that paid or received, as
appropriate, by the client
and that paid or received
by such Access Person) will
be required to be disgorged
to the appropriate client
or, if that is not
possible, to a charitable
organization designated by
the Ethics Committee.
Level One Access Persons
are prohibited from
profiting in the purchase
and sale of the same (or
equivalent) securities
within 60 calendar days.
This 60 day restriction is
in lieu of the general
seven day restriction on
short-term trading
described above. Any
profits realized on any
such short-term trades will
be required to be disgorged
to a charitable
organization designated by
the Ethics Committee.
Level One Access Persons
are required to disclose,
on commencement of
employment and subsequently
in an annual filing to
their Ethics Supervisor,
all their personal
securities holdings.
Reporting Requirements
All personnel are required to report his/her transactions in Covered Securities
holdings in Covered Accounts, as follows.
Reports of Each Transaction in a Covered Security
o Personnel are required to report to Compliance, no later than at the
opening of business on the business day following the day of execution
of a trade for a Personal Account, including:
name of security
nature of transaction (purchase, sale, etc.)
number of shares/units or principal amount
price of transaction
date of trade
name of broker
SSB and Schwab provide the New York Compliance Department with
a daily report of the above information with respect to any personal securities
transactions executed by New York-based personnel.
Any personnel seconded from London to New York who are granted a waiver
from the requirement to maintain personal accounts at SSB or Schwab shall,
within ten days after the end of each calendar quarter, provide the New York
Ethics Supervisor with copies of all pre-clearance forms and contract notes for
transactions executed through the London dealing desk.
The reporting obligation of London-based personnel shall be discharged
by arranging in advance for copies of contract notes/confirmations for all their
transactions to be sent automatically to Compliance upon completion of a trade.
Initial Employment
o No later than 10 days after initial employment with a US Schroder Group
Company, each employee must provide Compliance (New York or London, as
appropriate) with a list of each Covered Security s/he owns (as defined
above). The information provided must include the title of the
security, number of shares owned, and principal amount, as well as a
list of all Covered Accounts where Covered Securities are held. The
employee will sign and date the report.
Quarterly Reports
o No later than 10 days after the end of each calendar quarter, each
employee will provide Compliance (New York or London, as appropriate)
with a report of all transactions in Covered Securities in the quarter,
including the name of the Covered Security, the number of shares and
principal amount, whether it was a buy or sell, the price and the name
of the broker through whom effected. The employee will also report any
new Covered Accounts established during the quarter, including the name
of the broker/dealer and the date the Covered Account was established.
The report will be signed and dated by the employee.
Annual Reports
o Within 30 days after the end of the calendar, each employee must report
all his/her holdings in Covered Securities as at December 31, including
the title, number of shares and principal amount of each Covered
Security the employee owns (as defined above) and the names of all
Covered Accounts. The employee will sign and date the report.
Exceptions:
o An employee need not report any transactions in Covered Securities or
any Covered Accounts in which s/he has no direct or indirect influence
or control.
o A director of a Schroder Fund who is not an "interested person"6 is not
required to make initial, quarterly or annual reports provided that
s/he did not know, nor in the ordinary course of fulfilling his/her
duties as a director, s/he should not have known, that during the 15
day period immediately before or after his/her transaction in a Covered
Security, the Fund purchased or sold the Covered Security or that the
Covered Security was considered for purchase or sale by the Fund.
The information on personal securities transactions received and
recorded by SIM NA and SIMIL (on behalf of their employees) will be
deemed to satisfy the reporting obligations contained in Rule
204-2(a)(12) under the Advisers Act and Rule 17j-1 under the Investment
Company Act. Such reports may, where appropriate, contain a statement
to the effect that the reporting of the transaction is not to be
construed as an admission that the person has any direct or indirect
beneficial interest or ownership in the security.
Reports by the Ethics Supervisors
On a quarterly basis, the appropriate Ethics Supervisors, in order to
assist them in fulfilling their regulatory obligations, will report to
the Boards of Trustees of the Schroder Funds or the Schroder-managed
Funds, as appropriate, and the Supervisory Principal of SFA, any
violations of this Code and the actions, if any, taken by the Ethics
Committee.
Adopted: October 1, 1995
Amended: May 15, 1996
May 1, 1997
June 12, 1998
June 2, 1999
March 14, 2000
<PAGE>
APPENDIX A
DEFINITIONS
"Ethics Supervisor" means the persons designated from time to time by the Ethics
Committee to administer the Code, who currently are:
<TABLE>
<S> <C>
---------------------------------- --------------------------------------------------------------------------
Barbara Brooke Schroders U.S. Holdings Inc.
Manning for: Schroder Investment Management North America Inc. (New York and Mexico
(alts:) Evett Lawrence City)
Brian Murphy Schroder Investment Management North America Ltd. (Toronto only)
---------------------------------- --------------------------------------------------------------------------
---------------------------------- --------------------------------------------------------------------------
Barbara Brooke Schroder Fund Advisors Inc.
Manning for: Schroder Capital Funds
(alt: Sandra Poe) Schroder Investment Management North America Inc. (New York)
Schroder Capital Funds (Delaware)
Schroder Series Trust
---------------------------------- --------------------------------------------------------------------------
---------------------------------- --------------------------------------------------------------------------
Paul Martin for: Schroder Investment Management North America Inc. (London)
Schroder Investment Management North America Limited (London)
Schroder Investment Management International Limited
---------------------------------- --------------------------------------------------------------------------
</TABLE>
"Ethics Committee" means the committee designated by the US Schroder Group
Companies from time to time, which currently comprises:
Jeremy Willoughby (Chairman)
Richard Foulkes
Barbara Brooke Manning
Richard Mountford
Andrew Smethurst
Mark Smith
"Access Person" will be divided into two categories: Level One Access Person
means any director, officer or employee who is an Advisory Person (as defined
herein) of SIM NA, SFA, SI and the Schroder Funds. All other directors and
officers are Level Two Access Persons.
"Advisory Person" is any employee who, in connection with his/her regular
functions or duties, makes, participates in, or obtains information regarding
the purchase or sale of a security on behalf of any advisory client or
information regarding securities under consideration for purchase or sale on
behalf of clients or whose functions relate to the making of any recommendations
with respect to such purchases or sales.
A security is "being considered for purchase or sale" when a recommendation to
purchase or sell a security has been made or communicated and, with respect to
the person making the recommendation, when such person seriously considers
making such a recommendation.
"Covered Account" is an account in which securities are owned by you. This
includes IRA accounts. Under the Policy, accounts held by your spouse (including
his/her IRA accounts), minor children and other members of your immediate family
(children, stepchildren, grandchildren, parents, step parents, grandparents,
siblings, in-laws and adoptive relationships) who share your household are also
considered your accounts. In addition, accounts maintained by your domestic
partner (an unrelated adult with whom you share your home and contribute to each
other's support) are considered your accounts under this Policy.
If you are in any doubt as to whether an account falls within this definition of
Covered Account, please see Compliance. Further, if you believe that there is a
reason that you are unable to comply with the Policy, for example, your spouse
works for another regulated firm, you may seek a waiver from Compliance.
"Covered Securities" generally means stocks, bonds and options. The same
limitations pertain to transactions in a security related to a Covered Security,
such as an option to purchase or sell a Covered Security and any security
convertible into or exchangeable for a Covered Security.
Not covered by this Policy are:
o securities which are direct obligations of the U.S. Government (i.e.,
Treasuries)
o any debt security directly guaranteed by any OECD member Government
o bankers' acceptances, bank certificates of deposit, commercial
paper, repurchase agreements and other high quality short-term
debt instruments7
o shares or units in any open-end US registered investment company
(mutual fund)
o shares of any UK authorized unit trust8
"Disinterested Director/Trustee" means a Director or Trustee of the any of the
Schroder Funds who is not an "interested person" of the Funds within the meaning
of Section 2(a)(19) of the Investment Company Act or the rules thereunder.
"US Schroder Group Restricted List" means a list of securities determined from
time to time by the Ethics Committee, in accordance with provisions of the
Insider Trading Policy, to be inappropriate for trading by personnel covered by
this Code and, in certain circumstances, by any client portfolio of any US
Schroder Group Company.
<PAGE>
EX-99.B.9(p)(8)
Code of Ethics
For
Employees of Smith & Summers, LLC
INTRODUCTION
This Code of Ethics has been adopted by Smith & Summers, L.L.C., Smith
Asset Management Group, L.P. ("SAMG"), a registered investment adviser, and
Discovery Management, Ltd. ("DM"), which is not a registered investment adviser,
in connection with various investment advisory services they provide to certain
of the investment portfolios (each a "Client" ) of SAMG and/or DM. This Code
contains standards and procedures intended to assure that Employees (as defined
below) do not use any information concerning the investments or investment
intentions of a Client, or their ability to influence such investment
intentions, for personal gain or in a manner detrimental to the interests of the
Clients. The Personal Security Transactions Procedure, and forms of a request
for pre-clearance and reporting requirements are incorporated into this Code of
Ethics and attached as Appendix A.
SECTION 1. DEFINITIONS
(a) "Employee" means any employee, director, or officer, of Smith &
Summers, L.L.C., SAMG, or DM.
(b) "being considered for purchase or sale" means, with respect to a
security, when a recommendation to purchase or sell that security has
been communicated and, with respect to the person making the
recommendation, when that person seriously considers making the
recommendation.
(c) "Security `shall mean a security as defined in Section 2(a)(36) of the
Investment Company Act of 1940 (the "Act"); provided, however, that
the term shall not include:
(i) direct obligations of the Government of the United States;
(ii) high quality short-term debt instruments, including, but not
limited to, bankers' acceptances, bank certificates of
deposit, commercial paper, repurchase agreements covering any
of the foregoing, and, other money market instruments as
determined by Smith & Summers, L.L.C.
(iii) shares of registered open-end investment companies.
SECTION 2. PROHIBITED TRANSACTIONS
(a) Insider Trading Policy. (Section 204A) Employees are prohibited from
trading in a security, on their behalf or for others, while in
possession of material, nonpublic information ("insider trading).
Insider trading is a violation of the federal securities laws and may
result in criminal and civil penalties for the Employee and the Firm.
Tipping of material, nonpublic information is also prohibited.
The Firm considers information to be material if there is a substantial
likelihood that a reasonable shareholder would consider it important in
deciding how to act. Information is considered to be nonpublic when it
has not been disseminated in a manner making it available to investors
generally. Information becomes public once it is publicly disseminated;
limited disclosure does not make the information public.
Any questions regarding the Firm's insider trading policy should be
directed to the Compliance Officer.
(b) Securities Transactions. No Employee may execute any Security
transaction in any account in which the Employee has any direct or
indirect beneficial ownership unless the transaction has received
Pre-Clearance pursuant to Section 3, below. Such transactions include,
but are not limited to purchases or sales of Securities and private
placements and purchases, sales and exercises of puts, calls and
warrants.
(c) Undue Influence: Disclosure of Personal Interest. No Employee shall
cause or attempt to cause any Client to purchase, sell, or hold any
Security in a manner calculated to create any personal benefit to the
Employee. No Employee shall recommend any Securities transactions for a
Client without having disclosed his or her interest, if any, in such
Securities or the issuer thereof, including, without limitation:
(i) his or her direct or indirect beneficial ownership of any
Securities of such issuer;
(ii) any position with such issuer or its affiliates; and
(iii) any present or proposed business relationship between such
issuer or its affiliates and the Employee or any party in
which the Employee has a significant interest.
(d) Investment Opportunities. All Employees are expressly prohibited from
taking personal advantage of any investment opportunity
which is to the detriment of the Client.
(e) Confidentiality. Except as required in the normal course of carrying
out an Employee's business responsibilities, Employees are prohibited
from revealing information relating to the investment intentions or
activities of any Client or Securities that are being considered for
purchase or sale on behalf of any Client.
SECTION 3. PRE-CLEARANCE OF SECURITIES TRANSACTIONS
(a) Every Employee must obtain written pre-clearance from the Compliance
Officer or her designee, for any securities transaction in which the
Employee has a direct or indirect beneficial ownership. A form for the
purpose of obtaining pre-clearance is included in Appendix A.
(b) Pre-Clearance is not required for any of the following transactions:
(i) purchases or sales for any account over which an Employee has
no direct or indirect influence or control.;
(ii) purchases which are part of an automatic dividend reinvestment
plan; or
(iii) purchases made in the exercise of rights issued by an issuer
pro rata to all holders of a class of its Securities, to the
extent such rights were initially acquired from the issues.
(c) A Prohibited Security is any Security that either:
(i) is being considered for purchase or sale for any Client;
(ii) is being purchased or sold for any Client; or
(iii) has been purchased or sold for any Client within the preceding 7
calendar days.
For the purposes of this section, a purchase and sale of a Security for a Client
includes an initial and a final purchase and sale as well as any interim
adjustments to a Client's position.
(d) Approval will be granted for transaction in a Prohibited Security which
immediately follows the completion of all Client purchases and sales of
that Security and is the same direction as the Client's transactions
(i.e. a purchase which follows the completion of all Client purchases
or a sale which follows the completion of all Client sales).
(e) Except as provided above, approval will not be granted for any
transaction in a Prohibited Security. In addition, approval will not be
granted for any transaction in any Security if that transaction:
(i) would result in the buying or selling of securities in
competition with buy or sell orders of any Client, or operate
to the detriment of a Client, including executing a securities
transaction on a day during which a Client has a pending buy
or sell order for that same Security;
(ii) would be for the purpose of, or result in, buying or selling
securities to take advantage of recent or imminent trades
by a Client;
(iii) would involve the Security of a company with respect to which
the Employee has material non-public information;
(iv) would involve trading in options on any of the stocks held by
or contemplated for a Client;
(v) would take place before a sufficient period of time has
elapsed after a purchase or sale of the Security by a Client
for the effects of the Client's transaction on the market
price to dissipate (even though seven calendar days may have
elapsed); or
(vi) would, in the case of Investment Personnel, involve the
acquisition of a direct or indirect interest in any securities
in an initial public offering.
(f) Pre-Clearance shall be effective for one business day following the day
on which granted.
SECTION 4. COMPLIANCE PROCEDURES FOR THE CODE OF ETHICS
The Compliance Officer is responsible for monitoring Employee compliance with
the Code of Ethics, insuring that all Employees comply with the Code, and
enforcing the Code's requirements and prohibitions. The Compliance Officer will
respond to any questions regarding the Code of Ethics.
(a) Personal Holdings Disclosure Requirement/Annual Certifications. Every
Employee is required, upon his/her initial designation as an Employee
to disclose all of his/her personal Securities holdings and accounts.
On an annual basis, the Compliance Officer will distribute and
subsequently obtain a certification from each Employee, as described in
the Code of Ethics. If the Employee does not promptly deliver the
requested certification, the Compliance Officer will notify one or more
Managing Directors.
(b) Duplicate Trade Confirmation Requirement. Every Employee must direct
his/her broker(s) to supply on a timely basis, duplicate copies of
confirmations of all personal securities transactions and copies of
periodic statements for all accounts in which the Employee has any
beneficial ownership. Duplicate trade confirmations are not required
with respect to transactions effected for any account over which the
Employee does not have any direct or indirect influence or control.
(c) All reports are to be filed with the Compliance Officer of Smith &
Summers, LLC, or her designee. Forms of reports forcompliance can be
found in Appendix A.
(d) Reviewing Personal Securities Transactions. The Compliance Officer
will, on at least a quarterly basis, compare Request for Personal
Securities Transaction Forms with duplicate brokerage confirmations,
quarterly/monthly brokerage account statements, and quarterly
transaction reports to ensure that each Employee has requested and
obtained approval for each personal securities transaction during the
quarter. If the Compliance Officer does not receive confirmations or
statements on a timely basis, or quarterly reports no later than the
10th day following the end of each calendar quarter, the Compliance
Officer will contact the Employee(s) to request such document(s). If
the Employee does not promptly deliver the requested document(s), the
Compliance Officer will notify one or more Managing Directors.
(e) Requests for Personal Securities Transactions. The Compliance Officer
will review all Request for Personal Securities Transaction Forms and
determine whether to grant such requests. Before determining whether
to grant a request the Compliance Officer will obtain a report that
shows whether one or more advisory clients own the security for which
approval is sought. The report will also show the number of shares
(or the principle amount, as applicable) owned by clients. The
Compliance Officer will consider such report, and any other information
the Compliance Officer believes is necessary or appropriate, in
determining whether to grant a request. If an Employee seeks approval
to acquire a privately placed security, the Compliance Officer will
record, in writing, the reasons supporting any decision to approve the
acquisition. The Firm will maintain such written records for at least
five years after the end of the fiscal year in which the approval is
granted.
SECTION 5. SANCTIONS
(a) Sanctions. If the Compliance Officer finds that an Employee has
violated the Code of Ethics, the Compliance Officer will notify one or
more Managing Directors. The Managing Directors will determine and
impose appropriate disciplinary action, which may include a warning,
disgorgement of profits made or losses avoided, and/or dismissal.
SECTION 6. EXCEPTIONS
The Managing Directors, or their designee may grant exceptions to the policies
contained in the Code in appropriate circumstances.
I ____________________________________, an employee of Smith and Summers, LLC
acknowledge receipt and review of the Code of Ethics and the forms incorporated
in Appendix A.
------------------------ ------------------------
Name: Date
<PAGE>
Date of last revision: September 2000
EX-99.B(p)(9)
WELLS CAPITAL MANAGEMENT
CODE OF ETHICS
POLICY ON PERSONAL SECURITIES TRANSACTIONS
AND
INSIDER TRADING
Version 7.00
<PAGE>
<TABLE>
<S> <C>
Wells Capital Management Code of Ethics 7.00
TABLE OF CONTENTS
I. INTRODUCTION.....................................................................................3
I.1 CODE OF ETHICS.................................................................................3
I.2 "ADVISORY REPRESENTATIVE"...............................................................3
I.3 "BENEFICIAL OWNERSHIP"..................................................................3
II.
PENALTIES.........................................................................................5
II.1 VIOLATIONS OF THE CODE.........................................................................5
II.2 PENALTIES...............................................................................5
11.3 DISMISSAL AND/OR REFERRAL TO AUTHORITIES................................................5
III. EMPLOYEE TRADE PROCEDURES........................................................................7
III.1 PRE-CLEARANCE..................................................................................7
III.2 TRADE REPORTS..........................................................................8
III.3 POST-REVIEW.............................................................................9
III.4 PRE-CLEARANCE AND REPORTING REQUIREMENTS................................................9
III.5 CONFIDENTIALITY.........................................................................9
III.6 ACKNOWLEDGMENT OF BROKERAGE ACCOUNTS...................................................10
III.7 INITIAL AND ANNUAL HOLDINGS REPORT.....................................................10
IV. RESTRICTIONS....................................................................................11
IV.1 RESTRICTED SECURITIES...........................................................................11
IV.2 SHORT-TERM TRADING PROFITS (60-DAY TRADING RULE).......................................12
IV-3 BLACKOUT PERIODS..............................................................12
IV.4 NSIDER TRADING................................................................13
IV.5 GIFTS AND HOSPITALITY.........................................................13
IV.6 DIRECTORSHIPS AND OTHER OUTSIDE EMPLOYMENT....................................13
V. REGULATORY REQUIREMENTS.........................................................................14
V.I INVESTMENT ADVISERS ACT OF 1940 AND INVESTMENT COMPANY ACT OF 1940.................................14
V.2 REGULATORY
CENSURES......................................................................................14
VI. ACKNOWLEDGMENT AND CERTIFICATION................................................................15
VII. FREQUENTLY ASKED QUESTIONS (FAQS)...............................................................16
</TABLE>
<PAGE>
Wells Capital Management Code of Ethics 7.00
I. INTRODUCTION
I.1 Code Of Ethics Wells Capital Management (Wells Capital),
as a registered investment adviser, has
an obligation to maintain a policy
governing personal securities transactions
and insider trading by its officers and
employees. This Code of Ethics and Policy
on Personal Securities Transactions and
Insider Trading ("Code") is adopted under
Rule 17j-1 of the Investment Company Act
and Section 204A of the Investment Advisers
Act. This Code outlines the policies and
procedures for such activities based on
the recognition that a fiduciary
relationship exists between Wells Capital
and its clients. All references in this
Code to employees, officers, directors,
accounts, departments and clients refer to
those of Wells Capital.
In addition to this Code, please refer to
the policies outlined in the Handbook for
Wells Fargo Team Members and the Wells
Fargo Code of Conduct and Business Ethics.
Acknowledgment of, and compliance with,
this Code is a condition of employment. A
copy of the Code and applicable forms are
available on Wells Capital's common drive:
As an employee, you must -
o Be ethical
o Act professionally
o Improve competency
o Exercise independent judgment
I.2 "Advisory For the purposes of this Code, Wells Capital defines
"advisory Representative" representative" as any director,
officer or employee, who in connection with his or her
regular functions or duties -
o makes, participates in, or obtains information regarding the
purchase or sale of a security for an advisory client, or
o whose functions are related to the making of any
recommendations with regard to such purchases or sales.
Because all personnel may at some time access or obtain investment
information, Wells Capital designates all employees (including independent
contractors, if deemed appropriate) as "advisory representatives," and thereby
subject to the policies and procedures of the Code. The list of advisory
personnel will be updated each quarter.
I.3 "Beneficial Personal securities transaction reports should include all
accounts Ownership" for which you have direct or indirect control.
These include accounts over which you have any control, influence, authority,
either with or without beneficial interest, whether directly or
indirectly, including -
<PAGE>
Wells Capital Management Code of Ethics 7.00
o accounts of immediate family members in the same household; and
o any other account including but not limited to those of
relatives and friends, over which you direct activities.
Direct and indirect control may be further construed to include accounts for
which an Advisory Representative is sole owner, joint owner, trustee,
co-trustee, or attorney-in-fact.
I.
<PAGE>
Wells Capital Management Code of Ethics 7.00
II. PENALTIES
II.1 Violations of the Code The firm's Chief
Compliance Officer will report violations
of the Code on a quarterly basis to the
President. Each Advisory Representative
should immediately report to the Chief
Compliance Officer any known or reasonably
suspected violations of this Code of which
he or she becomes aware.
II.2 Penalties Penalties may be imposed on an Advisory Representative as
follows:
o Minor Offenses -
> First minor offense - Verbal
warning; > Second minor offense -
Written notice; > Third minor
offense - $1,000.00 fine to be
donated to the advisory
representative's charity of choice*;
o Substantive Offenses -
> First substantive offense -
Written notice; > Second substantive
offense - $1,000 or disgorgement of
profits (whichever is greater) to be
donated to the advisory
representative's charity of choice*;
> Third substantive offense -
Termination of employment and/or
referral to authorities.
Minor offenses include the following:
failure or late submissions
of quarterly trade reports and signed
acknowledgments of Code of Ethics forms
and certifications, failure to request
trade pre-clearance, and conflicting
pre-clear request dates versus actual
trade dates.
Substantive offenses include the
following: unauthorized purchase/sale of
restricted securities outlined in the
Code, violations of seven-day blackouts,
short-term trading for profit (60-day
rule), trading in conflict with clients'
transactions (such as the appearance of
potential front-running or scalping), and
insider trading.
<PAGE>
Wells Capital Management Code of Ethics 7.00
Wells Capital reserves the right to escalate the terms of this
Penalties section at any time and to use corrective action that it determines
is appropriate (including referral to authorities) -
and, if necessary, to terminate employment immediately.
* The fines will be made payable to the Advisory Representative's charity of
choice and turned over to Wells Capital, which in turn will mail the donation
check on behalf of the advisory representative.
II.3 Dismissal and/or Repeated violations of the Code may result in
dismissal. In addition, a Referral to single flagrant violation, such
as fraud or insider trading, will result Authorities in dismissal and
referral to authorities.
The firm's Chief Compliance Officer will forward potential Code violations
involving affiliated mutual funds to Wells Fargo Bank Mutual Fund Compliance.
<PAGE>
Wells Capital Management Code of Ethics 7.00
II. EMPLOYEE TRADE PROCEDURES
III.1 Pre-clearance
o All Advisory Representatives in the firm must pre-clear personal securities
transactions as specified in Section
III.4.
o All pre-clearance requests must be submitted via electronic mail to
WCM Risk Manage in the Global Address List. This will allow anyone in
the Compliance group to pre-clear requests at all times. Responses will
be sent back via electronic mail. Exceptions will be made only for
telephone requests from Advisory Representatives who are out of the
office on business or on vacation. It is the responsibility of the
Advisory Representative to ensure that Compliance receives pre-
clearance requests. If it appears that E-mail is down, please contact
anyone from the Compliance group directly.
o At a minimum, indicate the following information on your pre-clearance
request -
(a) Transaction Type: BUY or SELL
(b) Security Description / Ticker or CUSIP
(c) Security Type: Common Stock, Options, or Bonds
o Telephone requests from beneficial account holders outside the firm
will be accepted. Responses to requests will be forwarded to the
Advisory Representative via electronic mail.
o Requests may be submitted from 7:00 am (Pacific) until an hour
before the market closes for the day. Barring any problems with systems
access (i.e., SEI, Advent/Moxy), responses will be made no more
than an hour from the receipt of request.
o Pre-cleared trades are valid for same day trades only. No exceptions.
o Pre-clearance does not preclude the possibility of a potential conflict
appearing after the execution of an employee trade. Trades will be
screened for blackout violations and other conflicts, but quarter-end
review of each personal trade will reveal conflicts occurring after the
trade is executed (for example, 60-day rule violation).
o The use of the electronic mail system ensures that each report is date-
stamped, and it is the responsibility of each Advisory Representative
to ensure that the report has been received by Wells Capital
Compliance. Personal securities transactions should be reported,
whether pre-cleared or not.
<PAGE>
Wells Capital Management Code of Ethics 7.00
III.2 Trade Reports
o Quarterly Trade Reports which list personal securities transactions
for the quarter must be submitted by all employees no later than the
10th day after the end of each calendar quarter. This 10-day deadline
is a federal requirement and includes weekends and holidays. If the
10th day falls on a weekend or a holiday, the report is due the
business day immediately preceding this deadline.
o Quarterly Trade Reports must be submitted using the Quarterly Trade
Report form to Wells Capital Compliance, either via email (to WCM Risk
Manage)or via MAC (A0103-101). If there are no activities for the quarter,
a report indicating such is still required to be submitted.
o Wells Capital requires duplicate copies of trades confirms and monthly
or quarterly brokerage account statements to be forwarded to Compliance.
If your broker is unable to directly send duplicate copies, please inform
Compliance in writing to document this. Use the Request for Dupe Confirms
form to submit your request to your brokers (with a cc to Wells Capital
Compliance).
o When opening or closing brokerage accounts, please notify Compliance
in writing (quarterly) by using the Acknowledgment of Brokerage
Accounts form.
Forms relating to the Code of Ethics are available in the common drive
under the Wells Cap-News/Risk Management/Code of Ethics folder.
<PAGE>
Wells Capital Management Code of Ethics 7.00
III.3
Post-review Wells Capital Compliance will
match any broker confirms/statements
received to pre-clearance requests.
Discrepancies will be documented and may be
subject to censures, as outlined in the
PENALTIES section of this Code.
Employee transactions will also be screened for the following:
o Same day trades: Transaction occurring on the same day as the purchase or
sale of the same security in a managed account.
o 7-day Blackout period: Transaction up to and including seven calendar
days before and after the purchase and/or sale of the same security in a
managed account as described in Sec. I.V.3 of the Code (For
non-S&P500 securities). Note: All interim activity is considered,
not just the initial purchase or sale of a security.
o Short-term trading profits: Purchase/Sale, or vice versa, occurring
within 60 days in the same security resulting in net profit.
Advisory Representatives are responsible for ensuring that the 60-day
rule is observed when sale requests are made for securities previously
purchased, or vice versa.
o Other Potential conflicts: Certain transactions may also be deemed
in conflict with the Code and will
warrant additional review, depending on
the facts and circumstances of the
transaction.
III.4 Pre-Clearance and
Reporting Requirements
The table below indicates pre-clearance and reporting
requirements. Requirements for all other security type
transactions must be checked with Compliance.
Security Type Pre-Clearance Qtrly
Reporting
Equity transactions* Yes Yes
Fixed Inc transactions Yes Yes
Wells Fargo stock No Yes
Open-ended MF No No
Proprietary MF No No
US Tsy/Agencies No No
Short term/cash equiv. No No
SPP/DRIPs- auto purch** No No
*Including options, exchange-traded closed-end mutual funds. **Sale of stocks
from SPP or DRIPS: Please notify Wells Capital Compliance in writing of the
sale and include transactions in your quarterly reports.
<PAGE>
Wells Capital Management Code of Ethics 7.00
III.5 Confidentiality All reports of personal securities transactions,
holdings and any other information filed
pursuant to this Code will be kept CONFIDENTIAL,
provided, however that such information will
also be subject to review by appropriate Wells
Capital Personnel (Compliance and/or Senior
Management) and legal counsel. Such information
will also be provided to the Securities and
Exchange Commission ("SEC") or other government
authority when properly requested or under court
order.
III.6 Acknowledgment of All Advisory Representatives are required to submit
a list of all Brokerage Accounts brokerage accounts as required by the
Code at the time of hire.
In addition, employees are responsible for
ensuring that new or closed accounts are
communicated to Compliance quarterly. For
reporting purposes, use the Acknowledgment
of Brokerage Accounts form.
III.7 Initial and Annual All Advisory Representatives are required to report
brokerage Holdings Report accounts and holdings (subject to Code
requirements) within 10 days of employment. An Advisory Representative's
broker statement will suffice in lieu of a separate initial or annual
holdings report. It is the Advisory Representative's responsibility to
ensure that Compliance receives duplicate copies of statements and/or
confirms if those are sent directly by the brokers.
<PAGE>
Wells Capital Management Code of Ethics 7.00
IV RESTRICTIONS
The following are Wells Capital's restrictions on personal trading:
IV.1 Restricted Securities
<TABLE>
<S> <C> <C>
---------------------------------------- --------------------------------------- ----------------------------------------
SECURITY TYPE PURCHASE SALE
---------------------------------------- --------------------------------------- ----------------------------------------
---------------------------------------- --------------------------------------- ----------------------------------------
A. S&P500 stocks
PERMITTED PERMITTED
Subject to one-day blackout Subject to one-day blackout
during execution of client trades during execution of client trades
(except index program trades). Must (except index program trades). Must
pre-clear. pre-clear
---------------------------------------- --------------------------------------- ----------------------------------------
---------------------------------------- --------------------------------------- ----------------------------------------
B. Any security not included in
the S&P500 above and not defined PERMITTED PERMITTED
as "small cap" below.
Subject to pre-clearance Subject to pre-clearance
requirements. requirements.
---------------------------------------- --------------------------------------- ----------------------------------------
---------------------------------------- --------------------------------------- ----------------------------------------
C. Any restricted list security PERMITTED, subject to the following:
(and its associated option) PROHIBITED >> If security held prior to
defined as "small cap" Wells Capital employment and/or
(capitalization as defined by the version 9.99 of the Code, sale
holdings in WCM-actively managed permitted subject to
Small Cap funds including mutual pre-clearance requirements.
funds, DIFs and Collectives.
Small cap holdings in WCM-managed
small cap index funds are excluded
from this list.
---------------------------------------- --------------------------------------- ----------------------------------------
---------------------------------------- --------------------------------------- ----------------------------------------
D. Any security issued by a PERMITTED, subject to the following:
Wells Capital client PROHIBITED >> If security held prior to Wells
Capital employment and/or version
9.99 of the Code, sales subject
to pre-clearance requirements.
---------------------------------------- --------------------------------------- ----------------------------------------
---------------------------------------- --------------------------------------- ----------------------------------------
E. Automatic investment programs
or direct stock purchase plans PERMITTED PERMITTED
>> Subject to Code of Ethics >> Subject to Code of Ethics
reporting requirements reporting requirements
---------------------------------------- --------------------------------------- ----------------------------------------
---------------------------------------- --------------------------------------- ----------------------------------------
F. Initial Public Offerings PERMITTED, only
(IPO's) PROHIBITED >> If security held prior to
Wells Capital employment and/or
(An IPO is a corporation's first version 9.99 of the Code, sales offering of a
security representing subject to pre-clearance shares of the company to the
public) requirements.
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A. Private Placements PERMITTED, only
PROHIBITED >> If security held prior to Wells Capital
(A private placement is an offer or employment and/or sale of any
security by a brokerage version 9.99 of the Code, sales firm not
public offering, subject to pre- involving a requirements.
clearance for example, a venture
capital deal).
---------------------------------------- --------------------------------------- ----------------------------------------
</TABLE>
<PAGE>
Date of last revision: September 2000
Wells Capital Management Code of Ethics 7.00
IV.2 Short-Term Trading Profits The purchase and sale, or the sale and
purchase, of the same security (60-Day Trading Rule) (or equivalent)
within 60 calendar days and at a profit is PROHIBITED.
o This restriction applies without regard to tax lot considerations and
short-sales;
o Exercised options are not restricted, however, purchases and sales of
options occurring within 60 days resulting in profits are PROHIBITED;
o Exceptions require advance written approval from the f irm's Chief Compliance
Officer (or designee).
Profits from any sale before the
60-day period expires may require
disgorgement. Please refer to
"Penalties", section II of this
Code, for additional details.
IV. 3 Blackout Periods
For securities in the S&P 500 stocks,
a one-day firm-wide blackout will
apply if the issue is being traded
on behalf of a client, at the
time the pre-clear request is made.
The blackout will not apply to
trades of WCM-managed Index funds.
All other issues are subject to a
seven-day firm-wide blackout
period if traded on behalf of
WCM-managed funds (Mutual funds,
DIFs, Collectives).
Blackout periods apply to both buy
and sell transactions.
<PAGE>
Wells Capital Management Code of Ethics 7.00
IV.4 Insider Trading Wells Capital considers
information material if there is a
substantial likelihood that a reasonable
shareholder would consider it important
in deciding how to act. Information is
considered non-public when it has not
been disseminated in a manner making it
available to investors generally.
Information becomes public once it is
publicly disseminated, limited disclosure
does not make the information public
(e.g., disclosure by an insider to a
select group of persons).
Wells Capital generally defines insider
trading as the buying or selling
of a security, in breach of fiduciary
duty or other relationship of trust and
confidence, while in possession of
material non-public information. Insider
trading is a violation of federal
securities laws, punishable by a maximum
prison term of 10 years and fines of up
to $1 million for the individual and $2.5
million for the firm.
Tipping of material, non-public
information is PROHIBITED. An Advisory
Representative cannot trade, either
personally or on behalf of others, while
in possession of such information.
Front-running/scalping involves trading
on the basis of non-public information
regarding impending market transactions.
o Trading ahead of, or "front-running," a client or proprietary mutual fund
order in the same security; or
o Taking a position in stock index futures or options contracts prior
to buying or selling a block or securities for a client or
proprietary mutual fund account (i.e., self-front running).
Scalping occurs when an Advisory
Representative purchases shares of a
security for his/her own account shortly
before recommending or buying that
security for long-term investment to a
client and then immediately selling the
shares at profit upon the rise in the
market price following the recommendation.
IV.5 Gifts and Hospitality Wells Capital, as a
policy, follows Wells Fargo Bank's policy
regarding gifts and hospitality. Please
refer to WFB Employee Handbook for
requirements.
IV.6 Directorships and Other Wells Capital, as a policy, follows Wells
Outside Employment Fargo Bank's policy regarding directorships
and other outside employment. Please refer
to WFB Employee Handbook for requirements.
<PAGE>
Wells Capital Management Code of Ethics 7.00
V REGULATORY REQUIREMENTS
V.1 Investment Advisers Act The SEC considers it a violation
of 1940 and Investment of general antifraud provisions
Company Act of 1940 of federal securities laws
whenever an adviser, such as Wells
Capital, engages in fraudulent,
deceptive or manipulative conduct.
As a fiduciary to client assets,
Wells Capital cannot engage in
activities which would result in
conflicts of interests (for example,
"front-running," scalping, or favoring
proprietary accounts over those of the
clients').
V.2 Regulatory Censures The SEC can censure, place limitations
on the activities, functions, or
operations of, suspend for a
period not exceeding twelve months, or
revoke the registration of any
investment adviser based on a:
> Failure reasonably to supervise, with a
view to preventing violations of the
provisions of the federal securities
laws, an employee or a supervised
person who commits such a violation.
> However, no supervisor or manager shall
be deemed to have failed reasonably to
supervise any person, if
(a) there have been established
procedures, and a system for
applying such procedures,
which would reasonably be
expected to prevent and
detect, insofar as
practicable, any such
violation by such other person
and
(b) such supervisor or manager has
reasonably discharged the
duties and obligations
incumbent upon him/her by
reason of such procedures and
systems without reasonable
cause to believe that such
procedures and system were not
being complied with.
<PAGE>
Wells Capital Management Code of Ethics 7.00
VI ACKNOWLEDGEMENTS AND CERTIFICATION
I certify that I have received, read, understood and recognize that I am subject
to Wells Capital Management's Code of Ethics and Policy on Personal Securities
Transactions and Insider Trading. This Code is in addition to Wells Fargo's
policy on Business Conduct and Ethics, as outlined in the Employee Handbook.
In addition to certifying that I will provide complete and accurate reporting as
required by the Code and have complied with all requirements of the Wells
Capital Management Code, I certify that I will not:
o Execute any prohibited purchases and/or sales, directly or indirectly,
that are outside those permissible by the Code;
o Employ any device, scheme or artifice to defraud Wells Fargo, Wells
Capital Management or any company;
o Engage in any act, practice or course of business which operates or would
operate as a fraud or deceit upon Wells Fargo, Wells Capital Management
or any company;
o Make any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements, in light of the
circumstances under which they are made, not misleading;
o Engage in any manipulative practice with respect to Wells Fargo, Wells
Capital Management or any company;
o Trade on inside information;
o Trade ahead of or front-run any transactions for Wells Capital managed
accounts;
o Trade without obtaining the necessary pre-clearance.
I understand that it is a violation of the Investment Advisers Act of 1940 to
fail to submit a record of my personal securities transactions within 10
calendar days of quarter-end.
I understand that, as an employee of Wells Capital Management, it is my
responsibility to submit a list of all brokerage accounts in which I have
beneficial ownership or interest and control (as defined in the Code).
Additionally, I will notify Wells Capital Management Compliance upon opening or
closing brokerage accounts.
Any exceptions, where applicable, are noted as follows:
================================================================================
--------------------------------------------------------------------------------
------------------------------ ------------------
Signature Date
-----------------------------
NAME (Print)
The Acknowledgment and Certification form is due 10 days from date of receipt.
Signed copies must be submitted to Wells Capital Compliance, MAC A0103-101.
<PAGE>
Wells Capital Management Code of Ethics 7.00
VII FREQUENTLY ASKED Questions (FAQs)
o Who should I submit pre-clearance requests to, what is the minimum
information required, and what are the hours for submission of requests?
Pre-clearance requests should be submitted, via email, to WCM Risk
Manage, in the Global Address list. This ensures that someone in the
Compliance Group can process the request at all times. For specific
questions or concerns regarding the Code, you may direct your inquiries
to Monica Poon, our Chief Compliance Officer ([email protected] or
4I5/396-7016)
At a minimum, indicate whether the request is for a BUY or SELL and
include the name and/or ticker symbol of the security/securities.
Requests can be submitted beginning 7:00 am (Pacific) and no later than
an hour before the close of the equity markets. Pre-cleared requests
are only good for the day.
o What is the submission deadline for Quarterly Trade Report?
Quarterly Trade Reports are due 10 calendar days after the end of each
quarter. If the 10th day falls on a weekend or a holiday, the report is
due the business day preceding the weekend or the holiday. The 10-day
deadline is a regulatory requirement.
o Why is a Quarterly Trade Report required if duplicate confirms or
statements are already received from brokers?
WCM as an investment adviser is required to review employee
transactions to ensure that there are no conflicts of interests between
trades executed on personal accounts and those that are executed on
behalf of our managed accounts. The Quarterly Trade Report allows WCM
to reconcile the transactions that are reported by employees and the
activities posted on the statements. The report also provides
information when additional shares, stock dividends or receipts (such
as gifts of stocks) are added to the accounts.
o Why are duplicate copies of confirms and statements required to be
submitted to Compliance? Would the (Quarterly Report and pre-clear
requests suffice?
This is a regulatory requirement from a report issued by the SECs
Division of Investment Management (IM). The IM Report, among other
things, enlisted the NASD to adopt a rule requiring its members to
notify a fund or an investment adviser whenever an employee opens
an account with an NASD-member broker. Upon request of the fund or
adviser, the member broker is required to transmit duplicate copies
of the employee's trade confirms and account statements.
o Why are small cap issues restricted from employee purchases?
Because of the volume and size of orders that the small cap funds
generate, this policy ensures that any appearance of conflict (such as
front running and scalping) is avoided. For the purposes of WCM's Code
of ethics, restricted "small cap" issues are those that are held by
WCM-managed small cap funds, including the WF mutual funds, the DIFs
and the Collectives. Restricted small cap issues cannot be
<PAGE>
Wells Capital Management Code of Ethics 7.00
purchased by WCM employees until such time that the funds are out of the
same positions. This restriction covers new purchases only. If you held
a restricted stock before your WCM employment or before the Code was
revised in Sept 1999, you can sell your positions (subject to pre-clear
requirements) but you cannot re-purchase or add shares.
All other small capitalization issues that are not owned by these
managed small cap funds can be purchased by employees subject to
pre-clearance and reporting requirements.
o What is the 60-day rule and is it a regulatory requirement?
The 60-day rule prohibits employees from profiting from the purchase
and sale, or vice versa, of the same securities within 60-days.
This is not an SEC requirement but a taskforce guideline instituted by
the Investment Company Institute (ICI), the self-regulating
organization for the mutual fund industry. Similarly, IMR also has
recommended restrictions along the same lines. Because the mutual fund
board approves our code of Ethics and expects us to follow the
taskforce guidelines from the ICI/AIMR, we are closely bound by those
restrictions.
